[*] CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED
PORTIONS.
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ASSET PURCHASE AGREEMENT
AMONG
IGO CORPORATION
XMP ACQUISITION CORP.
XTEND MICRO PRODUCTS, INC.
AND
THE SHAREHOLDERS OF XTEND MICRO PRODUCTS, INC.
DATED AS OF AUGUST 29, 2000
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CONFIDENTIAL TREATMENT REQUESTED
TABLE OF CONTENTS
ASSET PURCHASE AGREEMENT
Page
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ARTICLE I THE ASSET PURCHASE................................................1
Section 1.1 Assets to Be Purchased.................................1
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Section 1.2 Excluded Assets........................................2
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Section 1.3 Liabilities............................................2
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Section 1.4 Purchase Price; Allocation; Taxes......................3
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Section 1.5 Issuance and Delivery of Purchase Price................6
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ARTICLE II REPRESENTATIONS AND WARRANTIES OF XTEND AND THE XTEND
SHAREHOLDERS .......................................................7
Section 2.1 Corporate Organization.................................7
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Section 2.2 Capital Structure......................................8
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Section 2.3 No Other Agreements to Sell Assets, Merge, Etc.........8
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Section 2.4 Authorization; Execution and Delivery..................8
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Section 2.5 Governmental Approvals and Filings.....................8
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Section 2.6 No Conflict............................................9
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Section 2.7 Financial Statements; Absence of Undisclosed
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Liabilities............................................9
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Section 2.8 Absence of Changes....................................10
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Section 2.9 Contracts and Commitments.............................11
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Section 2.10 Legal Proceedings.....................................11
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Section 2.11 Employee Matters......................................12
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Section 2.12 Taxes.................................................12
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Section 2.13 Intellectual Property.................................15
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Section 2.14 Environmental Matters.................................16
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Section 2.15 Unassumed Liabilities.................................17
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Section 2.16 Interests of Officers and Directors...................17
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Section 2.17 Restrictions on Business Activities...................17
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Section 2.18 Title to Properties; Absence of Liens and
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Encumbrances; Condition of Equipment..................17
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Section 2.19 Compliance with Laws..................................18
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Section 2.20 Labor Matters.........................................18
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Section 2.21 Insurance.............................................19
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Section 2.22 Brokers...............................................19
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Section 2.23 Disclosure............................................19
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Section 2.24 Investment Representations............................19
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Section 2.25 Computer Systems......................................20
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF IGO AND SUB..................20
Section 3.1 Corporate Organization................................20
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Section 3.2 Capital Structure.....................................21
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Section 3.3 Authorization, Execution and Delivery.................21
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Section 3.4 Governmental Approvals and Filings....................21
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Section 3.5 No Conflict...........................................21
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Section 3.6 Reports; Accuracy of Information......................22
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Section 3.7 Litigation............................................22
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Section 3.8 No Material Adverse Change............................22
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Section 3.9 Brokers...............................................22
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ARTICLE IV COVENANTS OF XTEND AND THE XTEND SHAREHOLDERS...................23
Section 4.1 Stock Transfer Restrictions...........................23
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ARTICLE V COVENANTS OF IGO AND SUB.........................................24
Section 5.1 Maintenance of Xtend Business Unit....................24
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Section 5.2 Accounts Receivable...................................24
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ARTICLE VI MUTUAL COVENANTS................................................24
Section 6.1 Confidentiality.......................................24
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Section 6.2 Expenses..............................................26
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Section 6.3 Public Announcements..................................26
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Section 6.4 Agreements to Cooperate...............................26
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ARTICLE VII RESERVED ......................................................27
ARTICLE VIII RESERVED......................................................27
ARTICLE IX CLOSING ......................................................27
ARTICLE X INDEMNITY ......................................................27
Section 10.1 Indemnification.......................................27
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Section 10.2 Escrow of Shares......................................28
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Section 10.3 Term of Escrow........................................29
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Section 10.4 Representatives.......................................30
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Section 10.5 Mechanics of Making Claims............................30
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Section 10.6 Custodian's Duties....................................32
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Section 10.7 Cash Offset...........................................33
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ARTICLE XI RESERVED ......................................................33
ARTICLE XII MISCELLANEOUS PROVISIONS.......................................34
Section 12.1 Knowledge.............................................34
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Section 12.2 Amendment and Modification............................34
--------------------------
Section 12.3 Waiver of Compliance..................................34
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Section 12.4 No Waiver of Representations and Warranties...........34
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Section 12.5 Notices...............................................34
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Section 12.6 Assignment............................................35
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Section 12.7 Governing Law.........................................35
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Section 12.8 Parties in Interest...................................36
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Section 12.9 Counterparts..........................................36
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Section 12.10 Headings and References...............................36
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Section 12.11 Entire Agreement......................................36
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Section 12.12 Severability..........................................36
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Section 12.13 Other Remedies........................................36
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Section 12.14 Further Assurances....................................36
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Section 12.15 Absence of Third Party Beneficiary Rights.............37
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Section 12.16 Mutual Drafting.......................................37
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Section 12.17 Dispute Resolution....................................37
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EXHIBITS
Exhibit A............Xtend Products
Exhibit B............Tangible Assets
Exhibit C............Intangible Assets
Exhibit D............Assigned Contracts
Exhibit E............Earn-Out Provisions
Exhibit F............Allocation of Purchase Price
Exhibit G............Bill of Sale
Exhibit H............Assignment and Assumption Agreement
Exhibit I............Non-Competition Agreement
Exhibit J............Depository Agreement
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "AGREEMENT") is entered into as of
August 2000, among iGo Corporation, a Delaware corporation ("IGO"), XMP
Acquisition Corp, a California corporation and a wholly-owned subsidiary of iGo
("SUB" or "PURCHASER"), Xtend Micro Products, Inc., a California corporation
("XTEND" or "SELLER") and the shareholders of Xtend Micro Products, Inc. (the
"XTEND SHAREHOLDERS").
RECITALS
A. Xtend is engaged in the business of selling and distributing
batteries, battery chargers, AC and DC power adapters, port replicators and
docking stations for notebook computers, a complete list of which products is
set forth on EXHIBIT A hereto (collectively, the "XTEND PRODUCTS").
B. The Boards of Directors of iGo, Sub and Xtend have deemed it
advisable that Sub purchase certain of the assets of Xtend under the terms and
conditions hereinafter set forth (the "ASSET PURCHASE").
In consideration of the mutual representations, warranties, covenants
and agreements herein contained and subject to the conditions and other terms
herein contained, the parties hereto agree as follows:
ARTICLE I
THE ASSET PURCHASE
Section 1.1 ASSETS TO BE PURCHASED. Subject to the terms and
conditions contained in this Agreement, at the Closing (as defined in Article IX
below) Xtend shall sell, assign, transfer and convey to Sub, free and clear of
all liens and encumbrances, and Sub shall purchase from Xtend, the assets
described below (collectively, the "PURCHASED ASSETS"): (i) the tangible assets
listed and described in EXHIBIT B hereto (collectively, the "TANGIBLE ASSETS"),
and (ii) all patents, trademarks, trade names, business names, internet domain
names, service marks, logos, website content, copyrights and licenses (including
all applications and registrations for the foregoing), with respect to the Xtend
Products, and all trade secrets, product designs and specifications, know-how,
inventions or other proprietary information of any kind relating to the Xtend
Products or to products currently under development or proposed or contemplated
for development by Xtend (collectively, the "INTANGIBLE ASSETS"), including
without limitation those items set forth on EXHIBIT C hereto. Without limiting
the foregoing, the Purchased Assets shall be deemed to include the following:
(a) All books and records, whether originals or copies,
whether financial, scientific or otherwise, relating to the Purchased Assets,
including (without limitation) all data, reports, analyses, models or studies
relating to the Xtend Products and any tests or other research (and all related
documentation) relating to the same, but excluding financial books and records,
as to which Sub shall be entitled to receive only photocopies;
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(b) All of Seller's rights under the reseller agreements,
distribution agreements, purchase contracts, supply contracts, service contracts
and other agreements, arrangements or relationships listed on EXHIBIT D hereto
(collectively, the "ASSIGNED CONTRACTS");
(c) All rights of Xtend, if any, under manufacturer's
warranties and guarantees relating to the Purchased Assets;
(d) All benefits and proceeds with respect to any claims
relating to insurance policies and arising with respect to periods prior to the
Closing Date.
(e) All licenses, permits, certificates, franchises,
accreditations and other indicia of authority relating to the Xtend Business
with respect to the Xtend Products;
(f) All rights to tooling specific to the Xtend Products,
whether such tooling be resident at Xtend's facilities or at those of the
manufacturer(s) of the products;
(g) All internet websites, including domain names therefor and
content thereof, maintained or developed by or for Xtend; and
(h) All customer lists and related customer database files,
and lists of principal customer or reseller contact persons, each only to the
extent that they relate to Xtend's sale of Xtend Products.
Section 1.2 EXCLUDED ASSETS Except as enumerated above, Xtend shall
retain and the Purchaser shall not acquire the remaining assets of Xtend.
Without limiting the foregoing, the Purchased Assets shall be deemed not to
include the following:
(a) All cash, cash equivalents, prepaid expenses, accounts
receivable, deposits, and bank accounts of Xtend; and
(b) Xtend's rights under this Agreement.
Section 1.3 LIABILITIES. Except as otherwise specifically set forth
herein, Sub shall not assume, or take title to the Purchased Assets subject to,
or in any way be liable or responsible for, any liabilities or obligations of
any kind of Xtend and Xtend shall continue to remain responsible for the same.
Without limiting the generality of the foregoing, Sub shall not assume or take
title to the Purchased Assets subject to any of the following:
(a) Any accounts payable, debts or other obligations of Xtend
outstanding as of the Closing Date or arising after the Closing, except as
expressly provided in this Agreement or an exhibit hereto with respect to the
Assigned Contracts;
(b) Any liability or obligation of Xtend arising from claims
for damage to property or persons in respect of any of Xtend's activities;
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CONFIDENTIAL TREATMENT REQUESTED
(c) Any liability or obligation of Xtend, or any of its
employees, for any federal, state, local or foreign income, sales, use,
transfer, employment and other taxes and any customs and duty liabilities;
(d) Any liability or obligation in respect of any plan,
agreement, arrangement or understanding under which benefits or compensation are
provided by Xtend for its employees, consultants or directors including but not
limited to, any contract or other obligation for health insurance, accrued
vacation, severance pay or other benefits, or any commissions or revenue or
profit sharing or other compensation.
(e) Any liability or obligation of Xtend based upon or arising
under any contract or agreement existing prior to or at the time of Closing,
other than pursuant to an Assigned Contract from and after the Closing Date;
(f) Any lien, encumbrance, security interest or charge of any
nature whatsoever; or
(g) Any liabilities or obligations arising from litigation to
which Xtend is or, based upon actions or events prior to the Closing, would be a
party.
Purchaser shall be responsible for, and hereby assumes (i) routine
warranty and return liabilities associated with the sale of products in the
ordinary course by Seller prior to the Closing Date (other than any products for
which return materials authorizations (RMA's) have been issued by Seller prior
to the Closing Date as agreed between Purchaser and Seller), (ii) any sales tax
liability arising in connection with the purchase or the assets contemplated by
this Agreement, and (iii) obligations with respect to the Assigned Contracts set
forth on EXHIBIT D hereto (other than past due obligations or obligations
arising from Seller's pre-Closing breach of such agreements).
Section 1.4 PURCHASE PRICE; ALLOCATION; TAXES.
(a) Purchase Price. The consideration to be paid to Xtend (the
"PURCHASE PRICE") shall consist of payments by cash and iGo common stock, par
value $0.001 per share ("IGO STOCK"), as follows:
(i) CLOSING PAYMENTS. At the Closing, iGo and/or Sub
shall (A) pay to the order of Xtend $2,500,000 via wire transfer in accordance
with the written instructions of Xtend delivered prior to the Closing (the
"CLOSING CASH"), and (B) issue to Xtend, effective on the date of the Closing, a
number of shares of iGo Stock (rounded to the nearest whole share, the "CLOSING
SHARES") determined by dividing $1,000,000 by the average closing price of the
iGo Stock on the Nasdaq National Market over the ten consecutive trading days
ending two trading days prior to the date of the Closing (as defined in Article
IX below) (the "AVERAGE TRADING PRICE").
(ii) PRIMARY EARN-OUT. Up to $5,100,000 in additional
shares of iGo Stock (the "PRIMARY EARN-OUT SHARES") shall be issued to Xtend
upon the achievement by the Xtend Business Unit of certain Gross Margin, Net
Revenue and EBITDA targets during the first twelve full calendar months
following the Closing (the "MEASUREMENT PERIOD"), which targets and resulting
share issuance calculations are further described in EXHIBIT E.
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CONFIDENTIAL TREATMENT REQUESTED
The Primary Earn-Out shares shall be issued to Xtend (based upon the Average
Trading Price and rounding to the nearest whole share) and placed in escrow
pursuant to the terms of Section 10.2 below, which shares shall be subject to
reduction upon any shortfall by the Xtend Business Unit in achieving the margin,
revenue and EBITDA targets or Quarterly Performance Standards set forth on
EXHIBIT E. The definition of the Xtend Business Unit, Gross Margin, Net Revenue,
EBITDA and Quarterly Performance Standards as well as the other terms and
conditions applicable to the Primary Earn-Out and the Bonus Earn-Out (as
described below) are set forth on EXHIBIT E. If the Closing occurs on a date
other than the last or first day of a calendar month, the operating results of
the Xtend Business Unit for the period between the Closing date and the
beginning of the first full calendar month following the Closing shall be
included within the first quarter of the Measurement Period. If the Closing
occurs on the first day of a calendar month, then the Measurement Period shall
be deemed to begin on the date of the Closing.
(iii) BONUS I EARN-OUT. In the event that the Xtend
Business Unit achieves (A) each of the Quarterly Performance Standards, and (B)
aggregate Net Revenue of at least [*], Gross Margin of at least [*] and
aggregate EBITDA of at least [*] for the entire Measurement Period, iGo will
issue to Xtend additional shares of iGo Stock (rounded to the nearest whole
share, the "BONUS I EARN-OUT SHARES" and combined with the Primary Earn-Out
Shares and, if applicable, the Bonus II Earn-Out Shares defined below, the
"EARN-OUT SHARES") determined by dividing $500,000 by the average closing price
of the iGo Stock on the Nasdaq National Market over the ten consecutive trading
days ending on the last trading day of the Measurement Period (the "FUTURE
TRADING PRICE").
(iv) BONUS II EARN-OUT. In the event that Xtend is
entitled to the Bonus I Earn-Out Shares, Xtend shall be entitled to an
additional payment of up to $2,000,000, to be paid in cash or iGo Stock at iGo's
discretion, equal to 150% of the EBITDA generated by the Xtend Business Unit in
excess of an aggregate of [*] for the entire Measurement Period. In the event
that iGo elect to make the payment contemplated by this paragraph in shares of
iGo Stock (the "BONUS II EARN-OUT SHARES"), the number of shares issuable to
Xtend shall be determined by dividing the dollar amount of the payment to which
Xtend is entitled by the Future Trading Price. Any cash payment or issuance of
Bonus II Earn-Out Shares to be made by iGo pursuant to this paragraph shall be
made as promptly as practicable following, and in any event within 30 days after
the end of, the Measurement Period.
(v) OFFSET. The number of Earn-Out Shares to which
Xtend is entitled is subject to reduction in accordance with the terms of
Article X (Indemnity) below.
(vi) ACCELERATION. In the event that, prior to the
first anniversary of the Closing Date, (A) Mark Rapparport's employment with iGo
and its subsidiaries (considered on a collective basis) is terminated pursuant
to Section 5(a)(ii) of the Employment Agreement between Mark Rapparport, Sub and
iGo dated as of the Closing Date (the "RAPPARPORT EMPLOYMENT AGREEMENT"), (B)
iGo undergoes a Change of Control, or (C) iGo sells all or substantially all of
the business then being conducted by the Xtend Business Unit (whether through
the sale of assets, sale or exchange of stock, merger or other reorganization)
(each of (A), (B) and (C) being deemed a "TRIGGERING EVENT"), the Earn-Out
Shares (or any cash equivalents thereof elected by iGo pursuant to Section
1.4(a)(iv)) shall be calculated as of the date of the Triggering Event based
upon the performance standards pro-rated across the portion of the Measurement
Period through and including the date of the Triggering Event in accordance with
the pro ration standards set forth on EXHIBIT E hereto.
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The percentage thresholds set forth in EXHIBIT E shall not be affected by this
paragraph. Notwithstanding the foregoing, in the event that Mark Rapparport's
employment with iGo and its subsidiaries (considered on a collective basis) is
terminated by iGo and its subsidiaries pursuant to Section 5(a)(ii) of the
Rapparport Employment Agreement (excluding any voluntary termination by Mr.
Rapparport for "good reason" thereunder) within the first six months following
the date of the Closing, then Xtend shall be entitled (subject to any offsets
under Section 1.4(a)(v) or Article X hereof) to 100% of the Primary Earn-Out
Shares, Bonus I and Bonus II Earn-Out Shares (or their cash equivalent under
Section 1.4(a)(iv)), PROVIDED, HOWEVER, that if the termination occurs following
the end of the first quarter of the Measurement Period and the Xtend Business
Unit has failed to achieve the Quarterly Performance Standards for such quarter
(as defined on EXHIBIT E hereto), then Xtend shall only be entitled to 50% of
the Primary Earn-Out Shares and no Bonus I or Bonus II Earn-Out Shares (or their
cash equivalent under Section 1.4(a)(iv))In the event that this paragraph
becomes operative, the Escrow Expiration Date (as defined in Section 10.4 below)
shall be the date 30 days following the date of the triggering action.
For purposes of the foregoing, as applicable to iGo, a "CHANGE OF
CONTROL" shall mean any of the following events: (1) any "person" (as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
said Act), directly or indirectly, of securities of iGo representing 50% or more
of the total voting power represented by iGo's then outstanding voting
securities other than in a private financing transaction approved by the Board
of Directors; (2) the direct or indirect sale or exchange by the stockholders of
iGo of all or substantially all of the stock of iGo; (3) a merger or
consolidation in which iGo is a party and in which the stockholders of iGo
before such ownership change do not retain, directly or indirectly, at a least
majority of the beneficial interest in the voting stock of iGo after such
transaction; or(4) an agreement for the sale or disposition by iGo of all or
substantially all of iGo's assets.
(vii) SURVIVAL OR TERMINATION OF EARN-OUT
OBLIGATIONS. The entitlement of Xtend and the Xtend Shareholders to the Earn-Out
Shares shall not be affected by the termination during the Measurement Period of
Mark Rapparport's employment with iGo and its subsidiaries (considered on a
collective basis) by reason of Mr. Rapparport's death or disability (which
physical or mental disability renders him unable to perform the basic duties
associated with his position for a period of not less than six months
notwithstanding reasonable accommodations (a "Disability"), in which case the
effective date of such termination for Disability shall be deemed to be
retroactive to the date on which such Disability first caused him to be unable
to perform his duties); provided, however, that in the event that any such
termination for Disability occurs following the sixth month of the Measurement
Period and so long as the Xtend Business Unit has achieved each of the Quarterly
Revenue, Gross Margin and EBITDA Targets set forth on EXHIBIT E hereto for each
full quarter prior to his termination for Disability, Xtend shall receive, in
satisfaction of iGo's obligations under Sections 1.4(a)(ii)-(iv) above, an
amount of Earn-Out Shares (or their cash equivalent if applicable) equal to the
GREATER OF (A) $2,677,000 or (B) the aggregate dollar amount of Earn-Out Shares
(or cash equivalents) that would result in the application of the calculations
under Sections 1.4(a)(ii)-(iv) at the close of the Measurement Period. However,
in the event that Mr. Rapparport voluntary resigns from his employment with iGo
and its subsidiaries (considered on a collective basis), other than for "Good
Reason" (as defined in the Rapparport Employment Agreement), prior to the date
one year from the Closing Date, then iGo shall be entitled to reclaim all
Primary Earn-Out Shares issued into escrow on Xtend's behalf and will have no
obligation to make any Primary, Bonus I or Bonus II Earn-Out payments.
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(viii) EARN-OUT REPORTS. Within twenty (20) days
following the close of the first three quarters during the Measurement Period
iGo will deliver to Xtend and the Xtend Shareholders an interim report setting
forth the quarterly operating results of the Xtend Business Unit in comparison
to the performance standards set forth on EXHIBIT E hereto and EXHIBIT A TO THE
XTEND BUSINESS UNIT OPERATING AGREEMENT agreed to by the parties of even date
herewith (the "Xtend Business Unit Operating Agreement"). As promptly as
practicably following the close of the Measurement Period, and in any event
within 30 days thereafter, iGo will deliver to Xtend and the Xtend Shareholders
a report setting forth the operating results of the Xtend Business Unit during
the Measurement Period and detailing iGo's calculations of the Primary, Bonus I
and Bonus II Earn-Out Shares to be released or issued (as applicable) to Xtend
and/or the Xtend Shareholders. Such report shall be accompanied by notice of
iGo's intention to pay the Bonus II Earn-Out (to the extent applicable) in
shares of iGo Stock or in cash. If cash is elected, iGo shall make such cash
payment to Xtend and/or the Xtend Shareholders concurrently with the delivery of
the Earn-Out Shares.
(b) ALLOCATION OF PURCHASE PRICE. For purposes of complying
with the requirements of Section 1060 of the United States Internal Revenue
CODE, as amended (the "Code"), the Purchase Price shall be allocated in
accordance with the schedule attached hereto as EXHIBIT F. Each party hereto
agrees to prepare its income tax returns for all current and future tax
reporting periods and file the appropriate forms with respect to this
transaction in a manner consistent with such allocation, and shall take no
position in any tax proceedings inconsistent with such allocation. If any taxing
authority challenges such allocation, the party receiving notice of such
challenge shall give the other prompt written notice of such challenge, and the
parties shall cooperate in good faith in responding to it in order to preserve
the effectiveness of such allocation.
(c) TAXES. Sub shall pay and discharge promptly when due all
sales, use, transfer, excise and other like taxes, if any, arising out of the
transfer of the Purchased Assets, or otherwise as a consequence of the
transactions contemplated by this Agreement.
Section 1.5 ISSUANCE AND DELIVERY OF PURCHASE PRICE.
(a) At the Closing, Sub shall deliver via wire transfer the
Closing Cash to the combination of Xtend and such other persons or entities as
may be designated pursuant to the settlement arrangements described at Section
7.8 below. In no event will iGo or Sub be required to pay Closing Cash in excess
of an aggregate of $2,500,000 to the combination of Xtend and such additional
designees.
(b) At the Closing, iGo shall issue to Xtend the Closing
Shares.
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CONFIDENTIAL TREATMENT REQUESTED
(c) At the Closing, iGo shall deposit into escrow the Primary
Earn-Out Shares.
(d) As soon as reasonably practicable following the close of
the Measurement Period, and in any event within 30 days thereafter (provided
that such period shall be extended as necessary until any dispute or potential
dispute in the calculation of the Earn-Out Shares has been resolved pursuant to
the terms of this Agreement), iGo shall deliver to its transfer agent, U.S.
Stock Transfer Corporation, an irrevocable instruction letter to issue to Xtend
effective as of the last day of the Measurement Period, the Bonus I Earn-Out
Shares and Bonus II Earn-Out Shares, both the extent that such issuances are
applicable under the terms of Section 1.4(iii) & (iv) above, which instruction
letter shall be accompanied by such legal opinions and other documents as may be
necessary or appropriate to allow the transfer agent to issue a certificate
representing such shares in a timely manner. iGo will cause the transfer agent
to issue such certificate no later than 30 days following the transmittal of the
instruction letter.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF XTEND AND THE XTEND SHAREHOLDERS
As of the date hereof, except as disclosed in a document referring
specifically to the relevant subsections of this Article II which is delivered
by Xtend to iGo prior to execution of this Agreement (the "Xtend Disclosure
Schedule"), Xtend and the Xtend Shareholders hereby represent and warrant to iGo
and Sub as follows:
Section 2.1 CORPORATE ORGANIZATION.
(a) Each of Xtend and its Subsidiaries (as defined below) is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation and has all requisite corporate power and
authority and all necessary governmental authorizations to own, lease and
operate its properties and to conduct its business as it is now being conducted.
A true and complete list of such Subsidiaries is set out in the Xtend Disclosure
Schedule, together with the jurisdiction of incorporation of each Subsidiary.
Each of Xtend and its Subsidiaries is duly qualified or licensed to do business
and is in good standing as a foreign corporation in each state or other
jurisdiction in which the nature of its business or operations or ownership of
its property requires such qualification or licensing, except where the failure
to be so qualified or licensed would not, individually or in the aggregate,
materially and adversely affect the condition (financial or other), business,
properties, prospects (as currently contemplated), net worth or results of
operations of Xtend and its Subsidiaries taken as a whole (collectively,
"XTEND'S BUSINESS").
As used in this Agreement, the term "SUBSIDIARY" means a "subsidiary"
as defined in Rule 1.01 in Regulation S-X promulgated under the Securities Act
of 1933, as amended (the "SECURITIES ACT"). To the extent that Xtend has any
Subsidiaries, all representations pertaining to Xtend under this Article II
shall be interpreted to refer to Xtend and its Subsidiaries unless such
representation specifically provides otherwise.
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Section 2.2 CAPITAL STRUCTURE. The authorized capital stock of Xtend
consists of 10,000,000 shares of Common Stock, no par value ("XTEND COMMON
STOCK"). There are currently outstanding 7,150,000 shares of Xtend Common Stock.
All outstanding shares of Xtend Capital Stock are validly issued, fully paid and
nonassessable and not subject to preemptive rights created by statute, Xtend's
Articles of Incorporation or Bylaws or any agreement to which Xtend or any of
its Subsidiaries is a party or by which Xtend or any of its Subsidiaries may be
bound. Xtend has provided iGo and its legal counsel with a complete and accurate
list of (a) all issuances of Capital Stock by Xtend, and (b) the names and
addresses of all holders of Xtend Capital Stock, together with the number and
type of shares held by each holder. Except as set forth in Schedule 2.2, there
are no options, warrants, calls, conversion rights, commitments or agreements of
any character to which Xtend or any Subsidiary of Xtend is a party or by which
any of them may be bound that do or may obligate Xtend or any Subsidiary of
Xtend to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of Xtend Capital Stock or of the capital stock of any
Subsidiary of Xtend or that do or may obligate Xtend or any Subsidiary of Xtend
to grant, extend or enter into any such option, warrant, call, conversion right,
commitment or agreement. Xtend is the owner of all outstanding shares of capital
stock of each of its Subsidiaries and all such shares are duly authorized,
validly issued, fully paid and nonassessable.
Section 2.3 NO OTHER AGREEMENTS TO SELL ASSETS, MERGE, ETC. Except as
provided hereby, Xtend has no legal obligation, absolute or contingent, to any
person or firm to sell assets (other than the sale of product inventory in the
ordinary course of business) or to effect any merger, consolidation or
reorganization of Xtend or to enter into any agreement with respect thereto.
Section 2.4 AUTHORIZATION; EXECUTION AND DELIVERY. Xtend and the Xtend
Shareholders have all requisite power and authority (a) to execute and deliver,
as applicable, this Agreement, the Bill of Sale in the form attached as EXHIBIT
G hereto (the "BILL OF SALE"), the Assignment and Assumption Agreement in the
form attached as EXHIBIT H hereto (the "ASSIGNMENT AND ASSUMPTION AGREEMENT"),
and the Non-Competition Agreement in the form attached as EXHIBIT I hereto (the
Bill of Sale, Assignment and Assumption Agreement and Non-Competition Agreements
being collectively referred to as the "XTEND ANCILLARY AGREEMENTS"), (b) to
perform their respective obligations under this Agreement and the Xtend
Ancillary Agreements, and (c) to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance of this Agreement and the
Xtend Ancillary Agreements by Xtend and the consummation by Xtend of the
transactions contemplated hereby and thereby have been duly approved and
authorized by all requisite corporate action of Xtend, including obtaining any
necessary approval of its shareholders. This Agreement has been duly executed
and delivered by Xtend and the Xtend Shareholders and, and assuming its due
authorization, execution and delivery by iGo and Sub, constitutes the legal,
valid and binding obligation of Xtend and the Xtend Shareholders, enforceable in
accordance with its terms.
Section 2.5 GOVERNMENTAL APPROVALS AND FILINGS. No approval,
authorization, consent, license, clearance or order of, declaration or
notification to, or filing, registration or compliance with, any governmental or
regulatory authority ("GOVERNMENTAL ENTITY") is required on the part of Xtend in
order (a) to permit Xtend to perform its obligations under this Agreement or (b)
to prevent the termination of any right, privilege, license or agreement of
Xtend or any Subsidiary of Xtend, or to prevent any loss to Xtend's Business, by
reason of the transactions contemplated by this Agreement, each to the extent
that such termination or loss would adversely effect the Purchased Assets.
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CONFIDENTIAL TREATMENT REQUESTED
Section 2.6 NO CONFLICT. Except as set forth on Schedule 2.6, neither
the execution, delivery and performance of this Agreement and the Xtend
Ancillary Agreements by Xtend and the Xtend Shareholders nor the consummation by
Xtend of the transactions contemplated hereby and thereby will (a) conflict
with, or result in a breach of, any of the terms, conditions or provisions of
Xtend's or any of Xtend's Subsidiaries' Articles of Incorporation or Bylaws (or
other organizational or charter documents), (b) conflict with, result in a
breach or violation of, give rise to a termination right or a default under,
result in the acceleration of performance under (whether or not after the giving
of notice or lapse of time or both), any mortgage, lien, lease, agreement, note,
bond, indenture, guarantee or instrument or any license or franchise granted by
or to a third party, in each case, that is material to Xtend's Business or the
Purchased Assets or that is referenced in the Xtend Disclosure Schedule, (c)
conflict with, or result in a violation of, any statute, regulation, law,
ordinance, writ, injunction, order, judgment or decree to which Xtend or any
Xtend Subsidiary or any of their assets may be subject, (d) give rise to a
declaration or imposition of any lien, charge, security interest or encumbrance
of any nature whatsoever upon any of the Purchased Assets, (e) adversely affect
any franchise, license, permit or other governmental approval which is material
to Xtend's Business or the Purchased Assets or (f) require the consent of any
third party.
Section 2.7 FINANCIAL STATEMENTS; ABSENCE OF UNDISCLOSED LIABILITIES.
(a) Xtend has furnished iGo with the unaudited consolidated
balance sheets of Xtend and its Subsidiaries as of June 30, 2000 (the "BALANCE
SHEET DATE") and the related compiled consolidated statements of operations,
cash flows and changes in shareholders' equity for the year then ended, and the
unaudited interim balance sheet and related consolidated statements of
operations, cash flows and changes in shareholders' equity for the seven-month
period ended June 30, 2000 (collectively, the "XTEND FINANCIAL STATEMENTS"). The
Xtend Financial Statements, including the notes thereto, (i) are in accordance
with the respective books of Xtend and its Subsidiaries; (ii) have been prepared
in accordance with generally accepted accounting principles consistently applied
throughout the periods involved; (iii) present fairly the consolidated financial
position of Xtend and its Subsidiaries as of the respective dates thereof and
the consolidated results of operations and cash flows of Xtend for the
respective periods indicated therein; and (iv) do not reflect any material items
of nonrecurring income except as stated therein. Since the Balance Sheet Date
there has been no change in Xtend's accounting principles, methods or policies,
except as described in the notes to the Xtend Financial Statements and except
that the unaudited interim financial statements (A) are subject to normal
year-end audit adjustments which are not expected to be material in the
aggregate and (B) do not include footnotes.
(b) Xtend has no liabilities of any nature, whether accrued,
absolute, contingent or otherwise, and whether due or to become due, which were
not disclosed or provided for in the Xtend Financial Statements or the notes
thereto other than obligations not required to be disclosed or provided for
under generally accepted accounting principles and liabilities incurred since
the Balance Sheet Date, which are not individually or in the aggregate, material
to Xtend's Business. All reserves set forth on the Xtend Financial Statements or
the notes thereto were adequate. There are no loss contingencies (as such term
is used in Statement of Financial Accounting Standards No. 5) which were not
adequately provided for in the Xtend Financial Statements or reflected in the
notes thereto.
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CONFIDENTIAL TREATMENT REQUESTED
(c) Xtend makes and keeps accurate books and records
reflecting in all material respects its assets and maintains internal accounting
controls which provide reasonable assurance that (i) transactions are executed
in accordance with management's authorization, (ii) transactions are recorded to
permit preparation of Xtend's financial statements and to maintain
accountability in all material respects for the assets of Xtend, (iii) access to
the assets of Xtend is permitted only in accordance with management's
authorization, and (iv) the recorded accountability of the assets of Xtend is
compared with existing assets at reasonable intervals.
Section 2.8 ABSENCE OF CHANGES. Except as set forth on Schedule 2.8,
since the Balance Sheet Date, Xtend has conducted its business only in the
ordinary course consistent with past practice and there has or have been no (a)
material adverse change in Xtend's Business or the Purchased Assets or any
development known to Xtend that is reasonably expected to cause a material
adverse change in Xtend's Business or the Purchased Assets; (b) damage,
destruction or loss (whether or not covered by insurance) materially and
adversely affecting any Purchased Assets (or the Purchased Assets as a whole;
(c) change by Xtend or its Subsidiaries in accounting principles or methods
except insofar as may be required by a change in generally accepted accounting
principles; (d) revaluation by Xtend or any of its Subsidiaries of any of their
assets, including, without limitation, writing down the value of inventory or
writing off notes or accounts receivable; (e) amendments or changes in the
Articles of Incorporation or Bylaws of Xtend; (f) capital expenditures by Xtend
or additions of equipment to existing leases exceeding $10,000 in the aggregate;
(g) destruction, damage to, or loss of any assets of Xtend (whether or not
covered by insurance); (h) labor trouble or claim of wrongful discharge,
discrimination or sexual harassment of which Xtend has received written notice
or of which Xtend is aware, or other unlawful labor practice or action; (i)
increase in the salary or other compensation payable or to become payable by
Xtend to any of its officers, directors or employees, or the declaration,
payment or commitment or any obligation of any kind for the payment by Xtend of
a bonus or other additional salary or compensation to any such person; (j)
acquisition, sale or transfer of any material asset of Xtend other than in the
ordinary course of business; (k) amendment or termination of any contract,
agreement or license to which Xtend is a party; (l) loan by Xtend to any person
or entity, or guarantee by Xtend of any loan, other than advances to employees
for travel and business expenses in the ordinary course of business and
consistent with past practices; (m) waiver or release of any material right or
claim of Xtend, including any write-off or other compromise of any account
receivable of Xtend; (n) the commencement or notice or threat of commencement of
any governmental proceeding against or investigation of Xtend or its affairs; or
(o) negotiation or agreement by Xtend or the Xtend Shareholders to do any of the
things described in the preceding clauses (a) through (n), other than
negotiations with iGo regarding the transactions contemplated by this Agreement.
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CONFIDENTIAL TREATMENT REQUESTED
Section 2.9 CONTRACTS AND COMMITMENTS.
(a) Neither Xtend nor any of its Subsidiaries is a party or
subject to any material contract or agreement not set forth on EXHIBIT D or in
Section 2.9 of the Xtend Disclosure Schedule.
(b) Each agreement, contract, mortgage, indenture, plan,
lease, instrument, permit, concession, franchise, arrangement, license and
commitment listed in the Xtend Disclosure Schedule is valid and binding on Xtend
or its Subsidiaries, as applicable, and is in full force and effect, and neither
Xtend nor any of its Subsidiaries, nor to the knowledge of Xtend, any other
party thereto, has breached any material provision of, or is in default under
the terms of, any such agreement, contract, mortgage, indenture, plan, lease,
instrument, permit, concession, franchise, arrangement, license or commitment.
(c) Except as set forth in Schedule 2.9(c), none of the 20
largest customers of Xtend or its Subsidiaries during the twelve months ended
December 31, 1999 (determined on the basis of both revenues and bookings during
such period) has materially reduced or terminated, or has notified Xtend in
writing that it intends to reduce or terminate, the amount of its business with
Xtend or any of its Subsidiaries.
(d) There is no agreement, judgment, injunction, order or
decree binding upon Xtend or its Subsidiaries which has or could reasonably be
expected to have the effect of prohibiting or materially impairing any material
current business practice of Xtend or its Subsidiaries, any acquisition of
material property by Xtend or its Subsidiaries or the conduct of business by
Xtend or its Subsidiaries as currently conducted.
Section 2.10 LEGAL PROCEEDINGS. Each of Xtend and its Subsidiaries is
not in violation of, and has not received any notice of any violation of (a) any
applicable statute, law, regulation, ordinance, writ, injunction, order,
judgment or decree, the effect of which violation could, individually or in the
aggregate, be materially adverse to Xtend's Business or the Purchased Assets, or
(b) any provision of the Articles of Incorporation or Bylaws (or other
organizational or charter document) of Xtend or any Xtend Subsidiary. There is
no order, writ, injunction, judgment or decree outstanding, and no legal,
administrative, arbitration or other proceeding, action, suit or governmental
investigation or inquiry against or relating to Xtend or any of Xtend's
Subsidiaries or their assets or business ("XTEND LEGAL PROCEEDINGS") pending or,
to the knowledge of Xtend, threatened and, to the knowledge of Xtend, there are
no claims (including unasserted claims as to which there has been a
manifestation by a potential claimant of an awareness of such claim or it is
considered probable that a claim will be asserted and there is a reasonable
possibility that the outcome will be unfavorable, all as such terms are used in
Statement of Financial Accounting Standards No. 5), against or relating to Xtend
or any of Xtend's Subsidiaries or their assets or business, which pending or
threatened Xtend Legal Proceedings or claims would reasonably be expected to
have, individually or in the aggregate, a material adverse effect on Xtend's
Business or the Purchased Assets. There is no Xtend Legal Proceeding which in
any manner challenges or seeks to prevent, enjoin, alter or delay any of the
transactions contemplated hereby. There are no existing liabilities that require
Xtend or any Xtend Subsidiary to indemnify its officers and directors for acts
or omissions by such persons or existing agreements to provide indemnification
for such liabilities. The Xtend Disclosure Schedule sets forth with respect to
each Xtend Legal Proceeding, the forum, the parties thereto, a brief description
of the subject matter thereof and the amount of damages claimed.
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CONFIDENTIAL TREATMENT REQUESTED
Section 2.11 EMPLOYEE MATTERS.
(a) Set forth in Section 2.11(a) of the Xtend Disclosure
Schedule is a true and complete list of all employees of Xtend, including
current wage or salary. In addition, set forth in Section 2.11(a) of the Xtend
Disclosure Schedule contains a true and complete list of all oral and written
employment contracts and all development and consulting contracts of Xtend.
Copies of all such employment contracts and developer and consulting contracts
have been delivered to iGo. All such contracts are valid and are in full force
and effect in all respects, and neither Xtend, nor any other party is in breach
or default of any such contract. Xtend has no written or oral agreement or
commitment to pay any person anything of value upon or in connection with the
termination of such person's employment or engagement by Xtend.
(b) All past and present directors, officers, employees,
developers and consultants of Xtend who have had and who have access to the
Intellectual Property (as defined below) and other proprietary information of
Xtend had and have executed and delivered to Xtend agreements regarding the
confidentiality and non-disclosure of such Intellectual Property and proprietary
information and the assignment of intellectual property rights to Xtend. All
such agreements are valid and remain in full force and effect, and neither
Xtend, nor any other party is in breach or default of any such agreement.
(c) Xtend has no knowledge of any current Xtend employee's
intention to leave the Xtend Business Unit at any time prior to the end of the
Measurement Period.
(d) To the knowledge of Xtend, no employee of Xtend is in
material violation of any contract or agreement, or any restrictive covenant,
relating to the right of any such employee to be employed by Xtend or with
respect to security clearance, trade secrets or proprietary information of
others, and the employment of any employee of Xtend does not subject Xtend to
any liability to any third party.
(e) Xtend does not and has not maintained any pension or
benefit plan for its employees.
Section 2.12 TAXES.
(a) DEFINITIONS. For purposes of this Agreement, the following
definitions shall apply:
(i) The term "TAXES" shall mean all taxes, however
denominated, including any interest, penalties or other additions to tax that
may become payable in respect thereof, imposed by any federal, territorial,
state, local or foreign government or any agency or political subdivision of any
such government, which taxes shall include, without limiting the generality of
the foregoing, all income or profits taxes (including but not limited to,
federal income taxes and state income taxes), payroll and employee withholding
taxes, unemployment insurance, social security taxes, sales and use taxes, ad
valorem taxes, excise taxes, franchise taxes, gross receipts taxes, business
license taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, transfer taxes, workers' compensation, Pension Benefit
Guaranty Corporation premiums and other governmental charges, and other
obligations of the same or of a similar nature to any of the foregoing, which
are required to be paid, withheld or collected.
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CONFIDENTIAL TREATMENT REQUESTED
(ii) The term "RETURNS" shall mean all reports,
estimates, declarations of estimated tax, information statements and returns
relating to, or required to be filed in connection with, any Taxes, including
information returns or reports with respect to backup withholding and other
payments to third parties.
(iii) The term "Group" shall mean, individually and
collectively, (A) Xtend, and (B) any person or entity, including without
limitation Xtend's Subsidiaries and the Xtend Shareholders, as to which Xtend
may be liable for Taxes incurred by such person or entity, either as a
transferee, pursuant to Treasury Regulations Section 1.1502-6, or pursuant to
any other provision of federal, territorial, state, local or foreign law or
regulations.
(iv) The term "Code" shall mean the Internal Revenue
Code of 1986, as amended.
(b) RETURNS FILED AND TAXES PAID. Except as set forth on
Schedule 2.12(b), all Returns required to be filed by or on behalf of the Group
have been duly filed on a timely basis and such Returns are true, complete and
correct. All Taxes shown to be payable on the Returns or on subsequent
assessments with respect thereto, and all payments of estimated Taxes required
to be made by or on behalf of the Group under Section 6655 of the Code or
comparable provisions of state, local or foreign law, have been paid in full on
a timely basis or have been accrued on the Financial Statements, and no other
Taxes are payable by the Group with respect to items or periods covered by such
Returns (whether or not shown on or reportable on such Returns) or with respect
to any period prior to the date of this Agreement. The Group has withheld and
paid over all Taxes required to have been withheld and paid over, and complied
with all information reporting and backup withholding requirements, including
maintenance of required records with respect thereto, in connection with amounts
paid or owing to any employee, creditor, independent contractor, or other third
party. There are no liens on any of the assets of the Group with respect to
Taxes, other than liens for Taxes not yet due and payable or for Taxes that the
Group is contesting in good faith through appropriate proceedings and for which
appropriate reserves have been established. No member of the Group has been at
any time a member of any partnership or joint venture for a period for which the
statue of limitations for any Tax potentially applicable as a result of such
membership has not expired.
(c) TAX RESERVES. The amount of Xtend's liability for unpaid
Taxes for all periods ending on or before the date of this Agreement does not,
in the aggregate, exceed the amount of the current liability accruals for Taxes
(excluding reserves for deferred Taxes) solely with respect to Xtend reflected
on the Xtend Financial Statements, and the amount of Xtend's liability for
unpaid Taxes for all periods ending on or before the Closing Date will not, in
the aggregate, exceed the amount of the current liability accruals for Taxes
(excluding reserves for deferred Taxes) solely with respect to Xtend reflected
on the balance sheet as of the Closing Date.
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CONFIDENTIAL TREATMENT REQUESTED
(d) RETURNS FURNISHED. iGo has been furnished by the Group
with true and complete copies of (i) relevant portions of income tax audit
reports, statements of deficiencies, closing or other agreements received by or
on behalf of the Group relating to Taxes, and (ii) all federal and state income
or franchise tax returns and state sales, use and property tax returns for the
Group for all periods ending on and after December 31, 1995, December 31, 1996
and December 31, 1997. The Group's returns for the fiscal years ending December
31, 1998 and December 31, 1999 have not yet been filed and all appropriate
extensions of time to file with respect thereto have been obtained. Xtend has
never been a member of an affiliated group of corporations filing consolidated
returns or a unitary group of corporations filing combined returns, other than a
group of which Xtend and the Shareholder are the only members. Neither Xtend nor
any member of the Group does business in or derives income from any state other
than states for which Returns have been duly filed and furnished to iGo.
(e) TAX DEFICIENCIES; AUDITS; STATUTES OF LIMITATIONS. The
Returns of the Group have never been audited by a government or taxing
authority, nor is any such audit in process, pending or threatened (either in
writing or verbally, formally or informally). No deficiencies exist or have been
asserted (either in writing or verbally, formally or informally) or are expected
to be asserted with respect to Taxes of the Group, and the Group has not
received notice (either in writing or verbally, formally or informally) nor
expects to receive notice that it has not filed a Return or paid Taxes required
to be filed or paid by it. The Group is neither a party to any action or
proceeding for assessment or collection of Taxes, nor has such event been
asserted or threatened (either in writing or verbally, formally or informally)
against the Group or any of its assets. No waiver or extension of any statute of
limitations is in effect with respect to Taxes or Returns of the Group. Xtend
and each member of the Group has disclosed on its federal income tax returns all
positions taken therein that could give rise to a substantial understatement
penalty within the meaning of Code Section 6662.
(f) TAX SHARING AGREEMENTS. Xtend is not (nor has it ever
been) a party to any tax sharing agreement.
(g) TAX ELECTIONS AND SPECIAL TAX STATUS. No member of the
Group is a party to any safe harbor lease within the meaning of Section
168(f)(8) of the Code, as in effect prior to amendment by the Tax Equity and
Fiscal Responsibility Act of 1982. Xtend is not, nor has it been, a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code, and iGo is not required to withhold tax by reason of Section 1445
of the Code. No member of the Group is a "consenting corporation" under Section
341(f) of the Code. No member of the Group has entered into any compensatory
agreements with respect to the performance of services which payment thereunder
would result in a nondeductible expense to the Group pursuant to Section 280G of
the Code or an excise tax to the recipient of such payment pursuant to Section
4999 of the Code. No member of the Group has participated in an international
boycott as defined in Code Section 999. The Xtend has not agreed to, nor is it
required to make any adjustment under Code Section 481(a) by reason of, a change
in accounting method, and the Group does not otherwise have any income
reportable for a period ending after the Closing Date attributable to a
transaction or other event (e.g., an installment sale) occurring prior to the
Closing Date involving in excess of $10,000. No member of the Group is or has
been a "reporting corporation" subject to the information reporting and record
maintenance requirements of Section 6038A and the regulations thereunder. Xtend
and the Xtend Shareholders made an election to be classified as a Subchapter S
Corporation under Section 1362(a) of the Code and corresponding provisions of
the laws of each state in which it is subject to taxes based upon its net
income, beginning with the tax year 1990 and has qualified as a Subchapter S
Corporation at all times since such date. Xtend does not own any subsidiary
which is a qualified Subchapter S subsidiary within the meaning of Section
1361(b)(3) of the Code.
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CONFIDENTIAL TREATMENT REQUESTED
(h) LIMITATIONS. Xtend is not obligated to make any payments
and is not a party to any agreement that under certain circumstances could
obligate it to make any payments that will not be deductible under Code Section
280G. Xtend has no net operating losses or other tax attributes currently
subject to limitation under Code Sections 382, 383, or 384 (or comparable
provisions of state law).
Section 2.13 INTELLECTUAL PROPERTY.
(a) To the best of its knowledge, Xtend owns, or is licensed
or otherwise possesses legally enforceable rights to use all patents,
trademarks, trade names, service marks, copyrights and any applications
therefor, technology, know-how and tangible and intangible proprietary
information or material that are used in the business of Xtend as currently
conducted that are material to such business or where the failure to have such
right would result or would be expected to result in a material adverse effect
on Xtend's Business (the "INTELLECTUAL PROPERTY"). EXHIBIT C sets forth all
patents, registered and unregistered trademarks and service marks, registered
and unregistered copyrights, trade names and service marks, and any applications
therefor, included in the Intellectual Property, and specifies the jurisdictions
in which each such Intellectual Property right has been issued or registered or
in which an application for such issuance and registration has been filed,
including the respective registration or application numbers and the names of
all registered owners. EXHIBIT C also sets forth (i) all licenses, sublicenses
and other agreements to which Xtend is a party and pursuant to which any person
is authorized to use any Intellectual Property and (ii) all licenses,
sublicenses and other agreements to which Xtend is a party and pursuant to which
Xtend is authorized to use any patents, trademarks, trade names, service marks,
copyrights and any applications therefor, technology, know-how and tangible and
intangible proprietary information or material of any third party (the "THIRD
PARTY INTELLECTUAL PROPERTY RIGHTS"), and EXHIBIT C includes the identity of all
parties to such licenses, sublicense and other agreements, a description of the
nature and subject matter thereof, the applicable royalty rates and the term
thereof.
(b) The execution and delivery of this Agreement and the
performance by Xtend of its obligations hereunder will not (i) cause Purchaser
to acquire rights in the Intellectual Property (including Third Party
Intellectual Property Rights) inferior to those held by Xtend prior to the
Closing, or (ii) alter the rights or obligations of any third party under or
violate any license, sublicense or other agreement described or required to be
described on EXHIBIT C, nor is Xtend currently in violation of any such license,
sublicense or other agreement described or required to be described on EXHIBIT
C. No claims with respect to the Intellectual Property, any trade secret of
Xtend or any Third Party Intellectual Property Rights (to the extent arising out
of any use, reproduction or distribution of such Third Party Intellectual
Property Rights by or through Xtend) have been asserted or, to the knowledge of
Xtend, are threatened by any person or entity, nor, to the knowledge of Xtend,
are there any valid grounds for any claims (i) to the effect that the
manufacture, sale, licensing or use of any product used, sold or licensed or
proposed for use, sale or license by Xtend infringes on any Third Party
Intellectual Property Right or trade secret; (ii) against the use by Xtend of
any patents, trademarks, trade names, service marks, copyrights, technology or
know-how used in Xtend's business as currently conducted or as proposed to be
conducted; (iii) challenging the ownership, validity, enforceability or
effectiveness of any Intellectual Property or any trade secret of Xtend or (iv)
challenging Xtend's license or legally enforceable right to use any Third Party
Intellectual Property Rights. All patents, registered trademarks, service marks
and copyrights held by Xtend are valid and subsisting.
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CONFIDENTIAL TREATMENT REQUESTED
(c) No Intellectual Property or trade secret of Xtend or, to
Xtend's knowledge, Third Party Intellectual Property Right to which Xtend holds
a license or sublicense is subject to any outstanding order, judgment, decree,
stipulation or agreement restricting in any manner the licensing thereof by
Xtend. Xtend has not entered into any agreement to indemnify any other person
against any charge of infringement of any Intellectual Property, any trade
secret of Xtend or any Third Party Intellectual Property Right.
Section 2.14 ENVIRONMENTAL MATTERS.
(a) No underground storage tanks and no amount of any
substance that has been designated by any Governmental Entity or by applicable
state law to be radioactive, toxic, hazardous or otherwise a danger to health or
the environment, including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant to
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, or defined as a hazardous waste pursuant to the Untied States
Resource Conservation and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to such laws (a "HAZARDOUS MATERIAL"), is present, as a
result of the actions of Xtend, or to the knowledge of Xtend, as a result of any
actions of any third party or otherwise, in, on or under any property, including
the land and the improvements, ground water and surface water thereof, that
Xtend has at any time owned, operated, occupied or leased.
(b) At no time prior to the Closing has Xtend transported,
stored, used, manufactured, disposed of, released or exposed its employees or
others to Hazardous Materials in violation of any law in effect on or before the
Closing Date, nor has Xtend disposed of, transported, sold or manufactured any
product containing a Hazardous Material (collectively "HAZARDOUS MATERIALS
ACTIVITIES") in violation of any rule, regulation, treaty or statute promulgated
by any Governmental Entity to prohibit, regulate or control Hazardous Materials
or any Hazardous Materials Activities.
(c) Xtend holds and the Purchased Assets include all
environmental approvals, permits, licenses, clearances and consents (the
"ENVIRONMENTAL PERMITS") necessary for the conduct of Xtend's Hazardous Material
Activities and other business activities of Xtend that are material to such
activities or where the failure to have such Environmental Permits would result
or be expected to result in a material adverse effect on Xtend's Business.
(d) No action, proceeding, revocation proceeding, amendment
procedure, writ, injunction or claim is pending or threatened concerning or
relating to Xtend, any Environmental Permit or any Hazardous Materials Activity
of Xtend. Xtend is not aware of any fact or circumstance that could involve
Xtend in any environmental litigation or impose upon Xtend any environmental
liability that would have a material adverse effect on Xtend's Business.
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CONFIDENTIAL TREATMENT REQUESTED
Section 2.15 UNASSUMED LIABILITIES. The sale, transfer and assignment
of the Purchased Assets in the manner contemplated hereby will not render Xtend
unable to pay its liabilities not assumed by Sub hereunder as they become due
and payable.
Section 2.16 INTERESTS OF OFFICERS AND DIRECTORS. No officer or
director of Xtend or any "affiliate" or "associate" (as those terms are defined
in Rule 405 promulgated under the Securities Act) of any such person has had,
either directly or indirectly, a material interest in: (a) any person or entity
which purchases from or sells, licenses or furnishes to Xtend or any of its
Subsidiaries any goods, property, technology or intellectual or other property
rights or services; (b) any contract or agreement to which Xtend or any of its
Subsidiaries is a party or by which it may be bound or affected; or (c) any
property, real or personal, tangible or intangible, used in or pertaining to
Xtend's Business, including any interest in the Xtend Intellectual Property
Rights.
Section 2.17 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no material
agreement, judgment, injunction, order or decree binding upon Xtend or any of
its Subsidiaries which has or could reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of Xtend or any of its
Subsidiaries, any acquisition of property by Xtend or any of its Subsidiaries or
the conduct of business by Xtend or any of its Subsidiaries as currently
conducted or as currently proposed to be conducted by Xtend or any of its
Subsidiaries.
Section 2.18 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES;
CONDITION OF EQUIPMENT.
(a) Schedule 2.18 lists all facilities occupied by Xtend or
any Xtend Subsidiary, and indicates the nature of Xtend's or its Subsidiary's
interest in such facilities. To the extent included within the Purchased Assets,
Xtend and its Subsidiaries have good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of their
tangible properties and assets, real, personal and mixed, used in their
business, free and clear of any liens, charges, pledges, security interests or
other encumbrances, except as reflected in the Xtend Financial Statements or
except for such imperfections of title and encumbrances, if any, which are not
substantial in character, amount or extent, and which do not materially detract
from the value, or interfere with the present use, of the property subject
thereto or affected thereby.
(b) The equipment owned or leased by Xtend or its Subsidiaries
is, taken as a whole, (i) adequate for the conduct of the business of Xtend and
its Subsidiaries consistent with their past practice (but for tangible assets
not being purchased hereunder based upon the parties' agreement that such assets
are unnecessary or duplicative of resources provided by iGo), (ii) suitable for
the uses to which it is currently employed, (iii) in reasonably good operating
condition, (iv) regularly and properly maintained, (v) not obsolete, dangerous
or in need of renewal or replacement, except for renewal or replacement in the
ordinary course of business, and (vi) free from any defects, except, with
respect to clauses (ii) through (vi) above, as would not have been a material
adverse effect on Xtend's Business.
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Section 2.19 COMPLIANCE WITH LAWS. Xtend has complied, and will be on
the Closing Date in compliance with all applicable, laws, ordinances,
regulations and rules, and all orders, writs, injunctions, awards, judgments and
decrees, applicable to Xtend, the Xtend Business or the Purchased Assets
including, without limitation: (a) all applicable federal and state securities
laws and regulations, (b) all applicable federal, state and local laws,
ordinances and regulations, and all orders, writs, injunctions, awards,
judgments and decrees, pertaining to (i) the sale, licensing, leasing, ownership
or management of Xtend's owned, leased or licensed real or personal property,
products, technical data and Intellectual Property, (ii) employment and
employment practices, terms and conditions of employment, and wages and hours,
and (iii) safety, health, fire prevention, environmental protection, building
standards, zoning and other similar matters, and (c) the Export Administration
Act and regulations promulgated thereunder and all other laws, regulations,
rules, orders, writs, injunctions, judgments and decrees applicable to the
export or re-export of controlled commodities or technical data. Xtend has
received all material permits and approvals from, and has made all material
filings with, third parties, including government agencies and authorities, that
are necessary in connection with its present business and such permits and
approvals will be transferred to Sub hereunder as part of the Purchased Assets.
Section 2.20 LABOR MATTERS.
(a) Xtend and its Subsidiaries are in compliance in all
material respects with all currently applicable laws and regulations respecting
employment, discrimination in employment, terms and conditions of employment and
wages and hours and occupational safety and health and employment practices, and
are not engaged in any unfair labor practice. Xtend and each of its Subsidiaries
has complied in all material aspects with all applicable provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") and has no
material obligations with respect to any former employees or qualifying
beneficiaries thereunder. Neither Xtend nor any of its Subsidiaries has received
any notice from any Governmental Entity, and there has not been asserted before
any Governmental Entity, any claim, action or proceeding to which Xtend or any
of its Subsidiaries is a party or involving Xtend or any of its Subsidiaries,
and there is neither pending nor, to Xtend's knowledge, threatened any
investigation or hearing concerning Xtend or any of its Subsidiaries arising out
of or based upon any such laws, regulations or practices. Except as is not
material to Xtend's Business, neither Xtend nor any Xtend Subsidiary has given
to or received from, or anticipates giving to or receiving from, any employee of
Xtend or any Xtend Subsidiary notice of termination of employment. The Xtend
Disclosure Schedule sets forth the terms pursuant to which all amounts may be
payable (whether currently or in the future) to current or former officers,
directors, or employees of Xtend or any Xtend Subsidiary as a result of or in
connection with the Asset Purchase.
(b) Neither Xtend nor any Xtend Subsidiary is a party to any
labor agreement with respect to its employees with any labor organization,
union, group or association and there are no employee unions (nor any other
similar labor or employee organizations) under local statutes, custom or
practice. Neither Xtend nor any Xtend Subsidiary has experienced any attempt by
organized labor or its representatives to make Xtend conform to demands of
organized labor relating to its employees or to enter into a binding agreement
with organized labor that would cover the employees of Xtend or any Xtend
Subsidiary. To Xtend's knowledge, there is no labor strike or labor disturbance
pending or threatened against Xtend nor is any grievance currently being
asserted. Neither Xtend nor any Xtend Subsidiary has experienced a work stoppage
or other labor difficulty.
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Section 2.21 INSURANCE. Except as set forth on the Xtend Disclosure
Schedule, the Xtend Disclosure Schedule contains a complete and accurate list of
all policies or binders of fire, liability, title, worker's compensation,
product liability and other forms of insurance maintained by Xtend and the Xtend
Subsidiaries. Neither Xtend nor any Xtend Subsidiary is in default under any of
such policies or binders, and neither Xtend nor any Xtend Subsidiary has failed
to give any notice or to present any claim under any such policy or binder in a
due and timely fashion. There are no facts known to Xtend upon which an insurer
might be justified in reducing coverage or increasing premiums on existing
policies or binders. There are no outstanding unpaid claims under any such
policies or binders. All policies and binders provide sufficient coverage for
the risks insured against, are in full force and effect on the date hereof and
shall be kept in full force and effect through the Closing Date.
Section 2.22 BROKERS. Except as set forth on Schedule 2.22, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this
Agreement. In the event that the preceding sentence is in any way inaccurate,
Xtend and the Xtend Shareholders agree to indemnify and hold harmless iGo and
Sub from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which Xtend or the Xtend Shareholders is responsible.
Section 2.23 DISCLOSURE. No representation or warranty made by Xtend
in this Agreement, nor any schedule or exhibit prepared and furnished or to be
prepared and furnished by Xtend or its representatives pursuant to this
Agreement, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements or
facts contained herein or therein not misleading in light of the circumstances
under which they were furnished. To the actual knowledge of Xtend, there is no
event, fact or condition that has resulted in, or could reasonably be expected
to result in, a material adverse effect on Xtend's Business or the Purchased
Assets that has not been set forth in this Agreement or in the Xtend Disclosure
Schedule.
Section 2.24 INVESTMENT REPRESENTATIONS. In connection with their
receipt of the Closing Shares and the Earn-Out Shares, Xtend and the Xtend
Shareholders (each an "Xtend Party") each represent as follows:
(a) The Xtend Party is aware of iGo's business affairs and
financial condition, and has acquired sufficient information about iGo
(including that information in iGo's public securities filings) to reach an
informed and knowledgeable decision to acquire the Asset Purchase Securities.
The Xtend Party is acquiring the Shares for its own account for investment
purposes only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Securities Act.
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(b) The Xtend Party understands that the Closing Shares have
not been and the Earn-Out Shares will not be registered under the Securities Act
or in any state in reliance upon specific exemptions therefrom, which exemptions
depend upon, among other things, the bona fide nature of my investment intent as
expressed herein.
(c) By reason of the business or financial experience of the
Xtend Party or the Xtend Party's professional advisors who are unaffiliated with
iGo or Sub, the Xtend Party has the capacity to protect its own interests in the
acquisition of the Closing Shares and/or the Earn-Out Shares.
Section 2.25 COMPUTER SYSTEMS. To the extent included in the Purchased
Assets, the computer systems and associated peripheral equipment, computer
software, technical and other documentation of Xtend and data entered into or
created by the foregoing from time to time constitute or, when installed will
constitute, all such items necessary for the operation of Xtend's Business in
the manner operated as of the Closing Date. Each of such items are Year 2000
Compliant. For purposes hereof, "Year 2000 Compliant" means that such systems
(a) can process, manipulate and store data relating to dates after December 31,
1999 as well as dates on or prior thereto; (b) can interpret and respond to
two-digit year date input in a manner that resolves any ambiguity as to the
century in which the year occurs; and (c) function accurately and without
interruption after January 1, 2000, without any adverse change in operations
associated with the advent of the new century.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF IGO AND SUB
As of the date hereof, except as disclosed in a document referring
specifically to the relevant subsections of this Article III which is delivered
by iGo to Xtend prior to execution of this Agreement (the "IGO DISCLOSURE
SCHEDULE"), iGo and Sub hereby represent and warrant to Xtend and the Xtend
Shareholders as follows:
Section 3.1 CORPORATE ORGANIZATION. iGo and Sub are corporations duly
organized, validly existing and in good standing under the laws of the State of
Delaware and the State of California, respectively, and each has all requisite
corporate power and authority and all necessary governmental authorizations to
own, lease and operate its properties and to conduct its business as it is now
being conducted. iGo and Sub are duly qualified or licensed to do business and
are in good standing as foreign corporations in each state or other jurisdiction
in which the nature of their respective businesses or operations or ownership of
their property requires such qualification or licensing, except where the
failure to be so qualified or licensed would not, individually or in the
aggregate, materially and adversely affect the condition (financial or other),
business, properties, prospects (as currently contemplated), net worth or
results of operations of iGo and Sub taken as a whole (collectively, "IGO'S
BUSINESS").
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Section 3.2 CAPITAL STRUCTURE. As of the date hereof the authorized
capital stock of iGo consists of 50,000,000 shares of iGo Common Stock, and
5,000,000 shares of Preferred Stock, $0.001 par value ("IGO PREFERRED STOCK").
At the close of business on June 30, 2000, 20,884,773 shares of iGo Common Stock
were outstanding and no shares of iGo Preferred Stock were outstanding. All
outstanding shares of iGo Common Stock are validly issued, fully paid,
nonassessable and free of preemptive rights. The shares of iGo Common Stock
issuable in connection with the Asset Purchase are duly authorized and reserved
for issuance and, when issued in accordance with the terms of this Agreement and
the Asset Purchase Agreement, will be validly issued, fully paid, nonassessable
and free of preemptive rights. As of the date hereof, the authorized capital
stock of Sub consists of 1,000 shares of Common Stock, no par value, all of
which are validly issued, fully paid and nonassessable and owned by iGo.
Section 3.3 AUTHORIZATION, EXECUTION AND DELIVERY. iGo and Sub each has
all requisite corporate power and authority (a) to execute and deliver this
Agreement and the agreements attached as exhibits hereto to which iGo or Sub is
a party (the "IGO ANCILLARY AGREEMENTS"), (b) to perform its respective
obligations under this Agreement, the Asset Purchase Agreement and the iGo
Ancillary Agreements, and (c) to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance of this Agreement, the
Asset Purchase Agreement and the iGo Ancillary Agreements by iGo and Sub and the
consummation by iGo and Sub of the transactions contemplated hereby and thereby
have been duly approved and authorized by all requisite corporate action of iGo
and Sub. This Agreement has been duly executed and delivered by iGo and Sub and,
assuming its due authorization, execution and delivery by Xtend, constitutes the
legal, valid and binding obligation of each of them, enforceable in accordance
with its terms.
Section 3.4 GOVERNMENTAL APPROVALS AND FILINGS. No approval,
authorization, consent, license, clearance or order of, declaration or
notification to, or filing, registration or compliance with, any Governmental
Entity is required on the part of iGo or Sub in order (a) to permit iGo and Sub
to perform their respective obligations under this Agreement or (b) to prevent
the termination of any right, privilege, license or agreement of iGo, or to
prevent any loss to iGo's Business, by reason of the transactions contemplated
by this Agreement, other than pursuant to the requirements of the Securities Act
and of state securities or "Blue Sky" laws and the rules of the Nasdaq National
Market applicable to the iGo Common Stock.
Section 3.5 NO CONFLICT. Except for compliance with the governmental
and regulatory requirements described in Section 3.4 hereof, neither the
execution, delivery and performance of this Agreement and the iGo Ancillary
Agreements by iGo and Sub nor the consummation by iGo and Sub of the
transactions contemplated hereby and thereby will (a) conflict with, or result
in a breach of, any of the terms, conditions or provisions of iGo's Certificate
of Incorporation, Sub's Articles of Incorporation, iGo's Bylaws or Sub's Bylaws,
(b) conflict with, result in a breach or violation of, give rise to a
termination right or a default under, or result in the acceleration of
performance under (whether or not after the giving of notice or lapse of time or
both), any mortgage, lien, lease, agreement, note, bond, indenture, guarantee or
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CONFIDENTIAL TREATMENT REQUESTED
instrument or any license or franchise granted by or to third party that is
material to iGo's Business, (c) conflict with, or result in a violation of, any
statute, regulation, law, ordinance, writ, injunction, order, judgment or decree
to which iGo or Sub or any of their respective assets may be subject, which
conflict, breach, default or violation would materially and adversely affect
iGo's Business, (d) give rise to a declaration or imposition of any lien,
charge, security interest or encumbrance of any nature whatsoever upon any of
the assets of iGo or Sub, (e) materially and adversely affect any franchise,
license, permit or other governmental approval which is material to iGo's
Business or is necessary to enable iGo or Sub to carry on their respective
businesses as presently conducted or is required of any employee or agent
thereof to enable each of them to carry out such person's duties on behalf of
iGo or Sub, as the case may be, or (f) require the consent of any third party.
Section 3.6 REPORTS; ACCURACY OF INFORMATION. iGo has previously
delivered to Xtend true and complete copies of (a) iGo's final prospectus dated
October 13, 1999, with respect to its initial public offering of securities, as
filed with the Securities Exchange Commission (the "COMMISSION") pursuant to the
Securities Act, (b) its Annual Report on Form 10-K for the fiscal year ended
December 31, 1999, and (c) its Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 2000, as filed with the Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"). As of their
respective dates, such prospectus and reports (collectively, the "PUBLIC
FILINGS") (i) complied with all applicable provisions, rules and regulations of
federal securities laws and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances in which such statements were made, not misleading.
Section 3.7 LITIGATION. Except as set forth in the Public Filings,
there is no action, suit, proceeding, investigation or claim pending or, to the
knowledge of iGo, threatened against iGo or any its Subsidiaries which could,
individually or in the aggregate, have a material adverse effect on iGo's
Business or which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay any of the transactions contemplated hereby.
Section 3.8 NO MATERIAL ADVERSE CHANGE. Since the date of the balance
sheet included in iGo's most recently filed report on Form 10-K, iGo has
conducted its business in the ordinary course and there has not occurred: (a)
any material adverse change in the financial condition, liabilities, assets or
business of iGo; (b) any amendment or change in the Articles of Incorporation or
Bylaws of iGo; (c) any damage to, destruction of or loss of any assets of the
iGo (whether or not covered by insurance) that materially and adversely affects
the financial condition or business of iGo; or (d) any sale of a material amount
of property of iGo, except in the ordinary course of business.
Section 3.9 BROKERS. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement. In the event that the preceding
sentence is in any way inaccurate, iGo agrees to indemnify and hold harmless
Xtend and the Xtend Shareholders from any liability for any commission or
compensation in the nature of a finder's fee (and the costs and expenses of
defending against such liability or asserted liability) for which iGo or any of
its directors, officers, partners, employees or representatives is responsible.
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ARTICLE IV
COVENANTS OF XTEND AND THE XTEND SHAREHOLDERS
Section 4.1 STOCK TRANSFER RESTRICTIONS. The Xtend and the Xtend
Shareholders acknowledge that the Closing Shares and the Earn-Out Shares will
each constitute "restricted securities" under Rule 144 promulgated under the
Securities Act. In addition to the restrictions on transfer imposed by
applicable securities laws, Xtend and each Xtend Shareholder covenants and
agrees not to offer to sell, contract to sell, or otherwise sell, dispose of,
loan, pledge or grant any rights with respect to (collectively, a "Disposition")
any Closing Shares, any options or warrants to purchase any Closing Shares or
any securities convertible into or exchangeable for shares of Closing Shares
(collectively, "Securities") now owned or hereafter acquired directly by Xtend
or such Xtend Shareholder or with respect to which Xtend or such Xtend
Shareholder has or hereafter acquires the power of disposition, otherwise than
(a) as a bona fide gift or gifts, provided the donee or donees thereof agree in
writing to be bound by this restriction, (b) as a distribution to partners or
shareholders of Xtend or such Xtend Shareholder, provided that the distributees
thereof agree in writing to be bound by the terms of this restriction, (c)
pursuant to a transfer to any trust for the direct or indirect benefit of the
Xtend Shareholder or the immediate family of the Xtend Shareholder, provided
that the trustee of the trust agrees to be bound by the terms of this
restriction, and provided further that any such transfer shall not involve a
disposition for value or (d) with the prior written consent of iGo, for a period
commencing on the date hereof and lapsing on the date one (1) year following the
date of the Closing of hereunder.
The foregoing restriction has been expressly agreed to preclude the
holder of the Securities from engaging in any hedging or other transaction
during the one-year period following the Closing which is designed to or
reasonably expected to lead to or result in a Disposition of Securities, even if
such Securities would be disposed of by someone other than such holder. Such
prohibited hedging or other transactions would include, without limitation, any
short sale (whether or not against the box) or any purchase, sale or grant of
any right (including, without limitation, any put or call option) with respect
to any Securities or with respect to any security (other than a broad-based
market basket or index) that included, relates to or derives any significant
part of its value from Securities. Xtend and the Xtend Shareholders also agree
and consent to the entry of stop transfer instructions with iGo's transfer agent
and registrar against the transfer of shares of Securities held by Xtend or the
Xtend Shareholders (or their permitted transferees) except in compliance with
the foregoing restrictions. Notwithstanding the foregoing, nothing herein shall
be deemed to prohibit a pro rata (in accordance with their relative
shareholdings), in-kind distribution of the Securities from Xtend to the Xtend
Shareholders during the restricted period, except that Xtend may not make any
such distribution during the restricted period to any shareholder of Xtend that
was not an Xtend Shareholder as of the Closing without iGo's prior consent,
which may be withheld in its discretion.
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ARTICLE V
COVENANTS OF IGO AND SUB
Section 5.1 MAINTENANCE OF XTEND BUSINESS UNIT. iGo covenants and
agrees to maintain the integrity of (and keep in tact) the Xtend Business Unit
through the Measurement Period and to operate it in accordance with the Xtend
Business Unit Operating Agreement. The foregoing sentence shall not prohibit iGo
and/or Sub from engaging in any of the activities set forth in Section
1.4(a)(vi) and in the event that such section is activated by a triggering event
and the calculation of earn-out payments is accelerated, this covenant shall
terminate.
Section 5.2 ACCOUNTS RECEIVABLE. Sub agrees that it will act as agent
for Xtend in the collection of the Xtend accounts receivable outstanding on the
Closing Date (the "CLOSING DATE RECEIVABLES"). All amounts received by Sub from
each customer of Xtend subsequent to the Closing Date shall first be applied to
such customer's outstanding Closing Date Receivables. Sub shall promptly remit
to Xtend 98% of all amounts received with respect to the Closing Date
Receivables (the remaining 2% of which shall be retained as processing fee). The
agency relationship described in this Section 5.2 shall terminate 180 days after
the Closing Date, at which time Sub shall transfer to Xtend all pertinent
information relating to the uncollected portion of the Closing Date Receivables.
ARTICLE VI
MUTUAL COVENANTS
Section 6.1 CONFIDENTIALITY.
(a) In connection with the negotiation of this Agreement, the
preparation for the consummation of the transaction contemplated hereby, and the
performance of obligations hereunder, each party hereto acknowledges that it has
had, and will have, access to confidential information relating to the other
party, including, but not limited to, technical, manufacturing or marketing
information, ideas, methods, developments, inventions, improvements, business
plans, trade secrets, scientific or statistical data, diagrams, drawings,
specifications or other proprietary information relating thereto, together with
all analyses, compilations, studies or other documents, records or data prepared
by the parties or their respective representatives which contain or otherwise
reflect or are generated from such information. All such information is herein
referred to as "CONFIDENTIAL INFORMATION"; provided, however, that the term
"Confidential Information" does not include information received by a party in
connection with the transaction contemplated hereby which (i) is or becomes
generally available to the public other than as a result of a disclosure by such
party or its representatives, (ii) was within such party's possession (as
evidenced by duly authenticated writings) prior to its being furnished to such
party by or on behalf of the other party in connection with the transaction
contemplated hereby, provided that the source of such information was not known
by such party to be bound by a confidentiality agreement with or other
contractual, legal or fiduciary obligation of confidentiality to the other party
or any other person with respect to such information or (iii) becomes available
to such party on a non-confidential basis from a source other than the other
party or any of its representatives, provided that such source is not bound by a
confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the other party or any other person with
respect to such information.
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(b) Nothing in this Section 6.1 is intended to grant any
rights under any patent or copyright of either party, nor shall this Section 6.1
grant any right in or to the other party's Confidential Information. Each party
shall use the other party's Confidential Information solely for the purpose of
consummating the transaction contemplated by this Agreement and shall use
reasonable efforts to treat all Confidential Information as confidential,
preserve the confidentiality thereof and not disclose any Confidential
Information, except to its representatives and affiliates who need to know such
Confidential Information in connection with the transaction contemplated hereby.
Each party shall cause its representatives to comply with the covenants in the
preceding sentence.
(c) All Confidential Information shall remain the property of
the party who originally possessed such information. In the event of the
termination of this Agreement for any reason whatsoever, iGo shall, and shall
cause its representatives to, promptly return to Xtend, and Xtend shall, and
shall cause its representatives to, promptly return to iGo, all Confidential
Information (including all copies, summaries and extracts thereof and all
analyses, compilations, studies or other documents, records or data which
contain, reflect or are generated from such Confidential Information) furnished
to iGo or Xtend, as the case may be, by the other party in connection with the
transactions contemplated hereby.
(d) If a party or any of its representatives or affiliates is
requested or required (by oral questions, interrogatories, requests for
information or documents in legal proceedings, subpoena, civil investigative
demand or other similar process) or is otherwise required by operation of law to
disclose any Confidential Information, such party shall provide the other party
with prompt written notice of such request or requirement, which notice shall,
if practicable, be at least 48 hours prior to making such disclosure, so that
the other party may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this Agreement. If, in the absence of a
protective order or other remedy or the receipt of such a waiver, such party or
any of its representatives are nonetheless, in the opinion of counsel, legally
compelled to disclose Confidential Information, then such party may disclose
that portion or the Confidential Information which such counsel advises is
legally required to be disclosed, provided that such party uses its reasonable
efforts to preserve the confidentiality of the Confidential Information,
whereupon such disclosure shall not constitute a breach of this Agreement.
(e) Each party agrees that its obligations provided herein are
necessary and reasonable in order to protect the other party and its business,
and each party expressly agrees that monetary damages would be inadequate to
compensate a party for any breach by the other party of its covenants and
agreements set forth herein. Accordingly, each party agrees and acknowledges
that any such breach or threatened breach will cause irreparable injury to the
other party and that, in addition to any other remedies that may be available,
in law, in equity or otherwise, such party shall be entitled to obtain
injunctive relief against the threatened breach of this Agreement or the
continuation of any such breach, without the necessity of proving actual
damages.
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Section 6.2 EXPENSES. Each party hereto will separately bear their own
expenses incurred in connection with this Agreement or any transaction
contemplated hereby.
Section 6.3 PUBLIC ANNOUNCEMENTS. All parties hereto agree to cooperate
in good faith with respect to any press release or public statement with respect
to the existence of this Agreement or the transactions contemplated hereby, and
further agree not to issue any such press release or public statement without
the prior written consent of iGo (in the case of a publication proposed by Xtend
and/or the Xtend Shareholders) on the one hand, or Xtend (in the case of a
publication proposed by iGo) on the other; PROVIDED, HOWEVER, that in the case
of announcements, statements, acknowledgments or disclosures which any party is
required by law to make, issue or release, the making, issuing or releasing of
any such announcement, statement, acknowledgment or disclosure by the party so
required to do so by law shall not constitute a breach of this Agreement if such
party shall have given, to the extent reasonably possible, not less than one
calendar day prior notice to the other party, and shall have attempted, to the
extent reasonably possible, to clear such announcement, statement,
acknowledgment or disclosure with the other party. Each party hereto agrees that
it will not unreasonably withhold any such consent or clearance. If, based upon
the advice of its outside legal counsel, iGo believes it to be necessary to meet
its public disclosure obligations or otherwise desirable; the parties will issue
a mutually agreed upon joint press release announcing the execution and delivery
of this Agreement.
Section 6.4 AGREEMENTS TO COOPERATE. Each party hereto will fully
cooperate with the other parties, their counsel and accountants in connection
with any steps required to be taken as part of its obligations under this
Agreement. Each party will use its best efforts to obtain all consents and
approvals necessary for the due and punctual performance of this Agreement. No
party will undertake any course of action inconsistent with this Agreement or
which would make any representations, warranties or agreements made by such
party in this Agreement untrue. In case at any time after the Closing any
further action is reasonably necessary to carry out the purposes of this
Agreement or to vest iGo or Sub with full title to all Purchased Assets, the
Xtend Shareholders and the proper officers and directors of each corporation
party to this Agreement shall take all such necessary action.
Section 6.5 WINDING UP OF XTEND AFFAIRS. The parties agree that Xtend
may continue its corporate existence following the Closing date for reasons
unrelated to the sale of products, provided that (a) any continuation will be
done under a mutually agreeable name reasonably dissimilar to "Xtend Micro
Products, Inc.", (b) no such continuation will be permitted if it would result
in the breach of Xtend's or any Xtend Shareholder's obligations pursuant to the
Non-Competition Agreements between any such party, iGo and Sub, and (c) such
continuation shall not result the diversion of any material amount of the
attention of Mark Rapparport or any other member of the Xtend Business Unit. In
the event of any dissolution of Xtend, each Xtend Shareholder will succeed to a
pro rata portion of Xtend's right to receive Earn-Out Shares pursuant to the
terms of Section 1.4(a). In the event that fractional shares are issuable to any
Xtend Shareholder based on a division of rights to receive the Earn-Out Shares,
iGo shall issue to such Xtend Shareholder the number of whole shares to which
such person is entitled and in lieu of issuing fractional shares shall pay to
such Xtend Shareholder by cash or check an amount equal to the product of the
applicable fraction multiplied by the Average Trading Price.
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ARTICLE VII
RESERVED
ARTICLE VIII
RESERVED
ARTICLE IX
CLOSING
A closing (the "CLOSING") will be held simultaneously with the
execution and delivery of this Agreement at the offices of Hale Lane Peek
Dennison Howard and Anderson, Professional Corporation, 100 West Liberty Street,
10th Floor, Reno, Nevada 89501, or such other location as iGo and Xtend shall
mutually agree upon. At the date of the Closing (the "CLOSING DATE"), iGo and
Sub shall deliver the Closing Cash and the Closing Shares against delivery of
the Bill of Sale, Assignment and Assumption Agreement, Non-Competition Agreement
and such other documents as iGo or Sub may require to consummate this
transaction.
ARTICLE X
INDEMNITY
Section 10.1 INDEMNIFICATION.
(a) Indemnification by Xtend. Subject to the provisions of
this Article X, from and after the Effective Time, Xtend and the Xtend
Shareholders shall jointly and severally indemnify and hold harmless iGo, iGo's
Subsidiaries and their respective affiliates, officers, directors, employees,
representatives and agents from and against any claims, losses, liabilities,
damages, arbitration or any legal actions (including, without limitation,
interest, penalties and reasonably incurred costs, expenses and legal fees and
expenses) (collectively, "LOSSES") arising from or in connection with (i) any
breach of a representation, warranty, covenant or agreement of Xtend contained
in this Agreement (including any Exhibits or Schedules attached hereto) or the
Xtend Ancillary Agreements; (ii) any claim arising out of or made in connection
with Xtend's conduct of its business prior to the Closing other than obligations
expressly assumed by Sub with respect to the Assigned Contracts; (iii) any
failure by the parties to comply in all respects with the "bulk sales" or "bulk
transfer" laws of any jurisdiction in connection with the transactions
contemplated herein; (iv) any employment or consulting relationship between
Xtend, the Xtend Shareholders or any affiliates thereof and any person other
than obligations expressly assumed by Sub with respect to the Assigned
Contracts; (v) successor liability imposed under any state laws imposing
successor liability for Taxes on purchasers of assets or (vi) excess return or
warranty claims not otherwise satisfied pursuant to Section 1.3 above.
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(b) INDEMNIFICATION BY IGO. Subject to the provisions of this
Article X, from and after the Effective Time, iGo shall indemnify and hold
harmless Xtend, the Xtend Shareholders and their respective affiliates,
officers, directors, employees, representatives and agents from and against any
Losses arising from or in connection with any breach of a representation,
warranty, covenant or agreement of iGo or Sub contained in this Agreement,
including any Exhibits or Schedules attached hereto, or the Xtend Business Unit
Operating Agreement.
(c) DEFINITIONS. With respect to their respective obligations
and rights under Section 10.1(a), Xtend and the Xtend Shareholders will be
referred to herein as "INDEMNIFYING PARTIES" and iGo, iGo's Subsidiaries and
their respective affiliates, officers, directors, employees, representatives and
agents will be referred to herein as "INDEMNIFIED PARTIES." Correspondingly,
with respect to their respective obligations and rights under Section 10.1(b),
iGo shall be referred to as an "INDEMNIFYING PARTY" and Xtend, the Xtend
Shareholders and their respective affiliates, officers, directors, employees,
representatives and agents will be referred to as "INDEMNIFIED PARTIES."
(d) FINANCIAL LIMITATION OF LIABILITY. The aggregate amount of
liability of the Indemnifying Parties pursuant to Section 10.1(a) and 10.1(b)
(each section to be considered separately for purposes of this paragraph) shall
not exceed the lesser of $7,500,000 or seventy-five percent (75%) of the
aggregate Purchase Price actually received by Xtend and the Xtend Shareholders
under Section 1.4(a) of this Agreement. Furthermore, the Indemnifying Parties
will only be responsible for indemnifying the Indemnified Parties under Sections
10.1(a) or 10.1(b) to the extent that the collective Losses under the applicable
section exceed $25,000; provided however that this limitation shall not apply to
damages for breach of iGo and Sub's obligations to deliver the Purchase Price
under Section 1.4 and 1.5 or to their obligation to service Xtend's receivables
pursuant to Section 5.2 hereof.
(e) TEMPORAL LIMITATION OF LIABILITY. No claim for
indemnification pursuant to this Article X shall be made subsequent to the date
which is 18 months after the Closing Date, or, in the case of claims based on
breach of Section 2.14 (Environmental Matters) subsequent to the date sixty (60)
months following the Closing Date and in the case of claims based on breach of
Section 2.12 (Taxes) subsequent to the date equal to the expiration of the
applicable statutory period of limitations plus sixty (60) days.
(f) EXCLUSIVE REMEDY. Absent common law fraud, the
indemnification provisions of this Article X shall be the exclusive remedy of
each party to this Agreement with respect to any claim arising out of this
Agreement. Xtend and the Xtend Shareholders acknowledge and agree that the
remedies available to iGo under this Article X shall not be limited (either by
time or amount) to proceeding against the Escrow Fund.
Section 10.2 ESCROW OF SHARES. On the Closing Date, iGo shall deposit
the Primary Earn-Out Shares with U.S. Stock Transfer Corporation, as custodian
(the "CUSTODIAN"), to be held and distributed in accordance with the terms of
this Agreement and an agreement between iGo, Xtend, the Xtend Shareholders and
U.S. Stock Transfer Corporation substantially in the form attached hereto as
EXHIBIT J (the "DEPOSITORY AGREEMENT").
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The Primary Escrow Shares deposited in the Escrow Fund shall be alternatively
referred to herein as "ESCROW SHARES" and the "ESCROW FUND" and will be
registered in the name of Xtend and maintained at the offices of the Custodian.
The Escrow Fund will be governed by the terms set forth herein and in the
Depository Agreement and shall be maintained at iGo's sole cost and expense. The
obligation of iGo and the Custodian to release the Escrow Shares to Xtend and/or
the Xtend Shareholders shall be subject to reduction to satisfy the Indemnifying
Parties' obligations under Section 10.1(a) as well as to any reductions pursuant
to the terms of Section 1.4(a) and EXHIBIT E. The interest of Xtend and/or the
Xtend Shareholders in the Escrow Shares shall not be assignable or transferable
in any manner except by operation of law, by will or by the laws of descent
until such Escrow Shares are released to Xtend or the Xtend Shareholders in
accordance with the terms of the Depository Agreement; provided that nothing
herein shall prohibit a distribution of Xtend's interest in the Escrow Shares to
the Xtend Shareholders.
Section 10.3 TERM OF ESCROW.
(a) DISTRIBUTION OF ESCROW SHARES. The Custodian shall deliver
the Escrow Shares, after giving effect to the reductions in or holdbacks of the
number of Escrow Shares as described in Section 10.2 above or Section 10.3(b)
below to Xtend and/or the Xtend Shareholders (as applicable) as promptly as
practicable following, and in any event within 30 days after the end of, the
Measurement Period (the "ESCROW EXPIRATION DATE"). The period commencing upon
the Closing Date and ending upon the Escrow Expiration Date shall be referred to
as the "ESCROW HOLDBACK PERIOD" for the Escrow Fund for purposes of EXHIBIT E.
(b) EXTENSION OF ESCROW. Notwithstanding Section 10.3(a), to
the extent iGo has made a claim which is being disputed by the Indemnifying
Parties in accordance with Section 10.5(c) below on the Escrow Expiration Date,
the Custodian shall withhold the issuance of and maintain in the Escrow Fund
such number of Escrow Shares as is reasonably necessary in the opinion of the
Custodian to satisfy such claim and upon resolution of such claim such withheld
Escrow Shares, after giving effect to any appropriate further reduction under
Section 10.2, shall be transferred by the Custodian to Xtend or the Xtend
Shareholders, as applicable. The period during which any escrow of Escrow Shares
existed under this Agreement is referred to herein as the "ESCROW PERIOD." Upon
expiration of the Escrow Period, the Escrow Fund shall terminate and the
Custodian shall deliver to each Indemnifying Party its pro rata portion of the
Escrow Shares remaining in the Escrow Fund.
(c) PROTECTION OF ESCROW FUND. The Custodian shall hold and
safeguard the Escrow Fund during the Escrow Period, shall treat such fund as a
trust fund in accordance with the terms of this Agreement and the Depository
Agreement and not as the property of iGo and shall hold and dispose of the
Escrow Fund only in accordance with the terms hereof and thereof.
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(d) DISTRIBUTIONS; VOTING; ADJUSTMENTS.
(i) Any shares of iGo Common Stock or other equity
securities issued or distributed by iGo (including shares issued upon a stock
split) ("NEW SHARES") in respect of shares of iGo Common Stock in the Escrow
Fund which have not been released from such Escrow Fund shall be added to the
Escrow Fund and become a part thereof. New Shares issued in respect of shares of
iGo Common Stock which have been released from the Escrow Fund shall not be
added to the Escrow Fund, but shall be distributed to the holders thereof. When
and if cash dividends on shares of iGo Common Stock in the Escrow Fund shall be
declared and paid, they shall not be added to the Escrow Fund but shall be paid
to those on whose behalf such shares of iGo Common Stock are held by the
Custodian.
(ii) Each Indemnifying Party shall have proportional
voting rights with respect to the shares of iGo Common Stock contributed to the
Escrow Fund and then held on behalf of such party (and on any voting securities
added to the Escrow Fund in respect of such shares of iGo Common Stock) so long
as such shares of iGo Common Stock or other voting securities are held in the
Escrow Fund. Until distributions of its interest in the Escrow Shares are made
by Xtend to the Xtend Shareholders, Xtend shall be entitled to receive any
distributions pursuant to Section 10.3(d)(i) and to all voting rights pursuant
to Section 10.3(d)(ii).
(iii) All share figures, trading prices and rates
used in determining the number of Escrow Shares to which Xtend and the Xtend
Shareholders are entitled to receive or obligated to forfeit shall be adjusted
accordingly to reflect any stock split, stock dividend or recapitalization by
iGo following the Closing Date.
Section 10.4 REPRESENTATIVES. For purposes of the operation of this
Article X, Xtend and the Xtend Shareholders (and, if applicable, any other party
included within the Indemnified Parties for purposes of Section 10.1(b)) shall
be represented hereunder by Mark Rapparport or his designee and iGo and iGo's
Subsidiaries (and, if applicable, any other party included within the
Indemnified Parties for purposes of Section 10.1(a)) shall be represented
hereunder by Ken Hawk or Mick Delargy, or either of their successors as Chief
Executive Officer or Chief Financial Officer, respectively, of iGo. Each of such
representatives is referred to herein as a "REPRESENTATIVE." To the extent that
such actions bear upon an Indemnified Party or the Custodian, the actions of the
Representatives shall be binding for purposes of this Agreement upon the parties
that they represent pursuant to this paragraph.
Section 10.5 MECHANICS OF MAKING CLAIMS.
(a) In the event that any written claim or demand for which
any Indemnified Party is entitled to indemnification is sought against an
Indemnifying Party or sought to be collected from any Indemnified Party by a
third party, promptly after the assertion of any such claim or demand, or
otherwise promptly upon discovery of any other Loss for which an Indemnified
Party seeks indemnification, such Indemnified Party shall notify the Custodian
(if during the Escrow Period and with respect to a claim under Section 10.1(a))
and the Representative of the Indemnifying Parties of such claim, demand or
Loss; PROVIDED, HOWEVER, that the failure promptly to give such notice shall not
affect the Indemnified Parties' rights hereunder except to the extent that such
failure shall adversely affect the Indemnifying Parties or their rights
hereunder.
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Notices of indemnity claims under Section 10.1(a) made following the Escrow
Period or under Section 10.1(b) at any time need only be delivered to the
applicable Indemnifying Parties. The asserting Indemnified Party shall advise
the Representative(s) of all material facts relating to such assertion within
the knowledge of such Indemnified Party, and shall afford the Representative(s),
in the event that they do not assume such defense pursuant to Section 10.5(d)
below, the opportunity to participate, at their own expense, in the defense
against such claims for liability, provided that the Indemnified Parties shall
control such defense.
(b) If such claim is made during the Escrow Period pursuant to
the indemnification provisions of Section 10.1(a) or the forfeiture provisions
of Section 1.4(a) and EXHIBIT E (for purposes of which the excess of the Primary
Earn-Out Shares over the number of Earned Primary Earn-Out Shares calculated in
accordance with EXHIBIT E shall be deemed to represent a claim against the
Escrow Fund) and is (i) not objected to by a Representative of the Indemnifying
Parties pursuant to Section 10.5(c) within fifteen (15) business days of the
Representative's receipt of notice of the claim, or (ii) agreed upon by the
parties or otherwise determined to be valid through operation of Section 12.17
below (as represented by evidence of such agreement or determination reasonably
satisfactory to the Custodian), such claim shall reduce the number of Escrow
Shares deliverable to Xtend and/or the Xtend Shareholders by a share number
(rounded to the closest whole number) equal to the amount of such Losses divided
by the Offset Price. For purposes of this section, the "OFFSET PRICE" shall be
deemed to be the Average Trading Price, unless the average trading price of the
iGo Stock on the Nasdaq National Market over the ten consecutive trading days
ending two days prior to the date on which the amount of Escrow Shares to be
forfeited is calculated (the "FUTURE TRADING PRICE") is less than the Average
Trading Price, in which case the Offset Price will be the Future Trading Price.
To the extent that Escrow Shares are forfeited by Xtend and/or the Xtend
Shareholders (and the Escrow Fund thereby reduced) pursuant to the provisions of
this Article X (or operation of Section 1.4(a) and EXHIBIT E), such forfeited
shares shall be transferred back to iGo and shall revert to iGo's authorized but
unissued Common Stock.
Notwithstanding the foregoing paragraph, no such reduction to the
Escrow Fund shall be made if the Indemnifying Parties have (A) delivered the
election notice set forth in Section 10.7 below indicating the intention of the
Indemnifying Parties to satisfy such indemnification obligation in cash rather
than Escrow Shares, and (B) actually made such cash payment to the applicable
Indemnified Parties in compliance with the terms of Section 10.7.
(c) During the Escrow Period, if a Representative of the
Indemnifying Parties shall, in good faith, notify the Indemnified Party making
the indemnity claim and the Custodian in writing within such 15 business day
period of the Representative's objection to a claim of indemnification, the
Escrow Shares shall not be delivered to the Indemnified Party until the rights
of the Indemnifying Parties and such Indemnified Party with respect thereto have
been determined pursuant to Section 12.17 below. The Custodian shall be entitled
to act in accordance with such determination and to make or withhold payments
out of the Escrow Fund in accordance therewith. Any notice by a Representative
of his objection to a claim shall be accompanied by a reasonably detailed
explanation as to the specific issue(s) in dispute and the basis(es) on which
the Representative disputes them.
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(d) The Indemnified Parties shall have the right (i) to
defend, settle or compromise any claim or liability subject to indemnification
under this Article X, and (ii) to be indemnified from and against all Losses
resulting therefrom, UNLESS the Indemnifying Parties, within 30 business days
after receiving such notice of the claim or liability in accordance with Section
10.5(a) notify a Representative of the Indemnified Parties in writing that they
intend to assume the defense against such claim or liability and in fact
promptly do so. In the event that the Indemnifying Parties assume the defense of
any such claim, the Indemnified Party may retain separate counsel at its sole
cost and expense (except that the Indemnifying Parties shall be responsible for
the fees and expenses of one separate co-counsel for the Indemnified Party to
the extent the Indemnified Party is advised in writing by its counsel that the
counsel the Indemnifying Parties have selected has a conflict of interest) and
participate in the defense in a non-controlling manner.
(e) Except as otherwise provided in Section 10.5(d), the
Indemnifying Parties shall not be liable under this Article X for any settlement
effected without the prior consent of the Indemnifying Parties or their
Representative acting on their behalf (which consent in either case may not be
unreasonably withheld) of any claim, liability or proceeding for which indemnity
may be sought hereunder. In the event that the Indemnifying Parties assume the
defense of any claim, liability or proceeding pursuant to Section 10.5(d), the
Indemnifying Parties may not settle any such claim liability or proceeding
without the prior consent of the Indemnified Parties or their Representative
acting on their behalf (which consent in either case may not be unreasonably
withheld).
(f) If, as of the Escrow Expiration Date, the number of
unearned (and therefore forfeited) Primary Earn-Out Shares pursuant to Section
1.4(a) and EXHIBIT E exceeds the number of Escrow Shares forfeited during the
escrow period in satisfaction of claims under Section 10.1(a) (including Escrow
Shares subject to forfeiture under pending claims against the Escrow Fund), then
within fifteen (15) business days following the final determination of the
number of Earned Primary Earn-Out Shares under EXHIBIT E, the Indemnifying
Parties shall deliver to iGo a one-time, lump sum cash payment equal to the
product of the Average Trading Price multiplied by the number of shares (rounded
to the nearest whole share, if applicable) by which the number of unearned
Primary Earn-Out Shares exceeds the number of Escrow Shares forfeited or subject
to forfeiture pursuant to claims under Section 10.1(a).
Section 10.6 CUSTODIAN'S DUTIES.
(a) The Custodian shall be obligated only for the performance
of such duties as are specifically set forth herein, and as set forth in any
additional written escrow instructions which the Custodian may receive after the
date of this Agreement which are signed by an officer of iGo and by each of the
Indemnifying Parties, and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed to be genuine and
to have been signed or presented by the proper party or parties. The Custodian
shall not be liable for any act done or omitted hereunder as Custodian while
acting in good faith and in the exercise of reasonable judgment, and any act
done or omitted pursuant to the advice of counsel shall be conclusive evidence
of such good faith.
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(b) The Custodian is hereby expressly authorized to disregard
any and all warnings given by any of the parties hereto or by any other person,
excepting only orders or process of courts of law, and is hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case the Custodian obeys or complies with any such order, judgment or decree of
any court, the Custodian shall not be liable to any of the parties hereto or to
any other person by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
(c) The Custodian shall not be liable in any respect on
account of the identity, authority or rights of the parties executing or
delivering or purporting to execute or deliver this Agreement or any documents
or papers deposited or called for hereunder.
(d) The Custodian shall not be liable for the expiration of
any rights under any statute of limitations with respect to this Agreement or
any documents deposited with the Custodian.
(e) The Custodian may resign at any time upon giving at least
30 days written notice to the Representatives of the respective Indemnifying
Parties pursuant to the provisions of this Agreement; provided, however, that no
such resignation shall become effective until the appointment of a successor
escrow agent which shall be accomplished as follows: the Representatives shall
use their best efforts to mutually agree upon a successor agent within 30 days
after receiving such notice. If the parties fail to agree upon a successor
transfer agent within such time, the Custodian may petition any court of
competent jurisdiction for the appointment of a successor escrow agent
authorized to do business in California or for other appropriate relief. The
successor escrow agent selected in the preceding manner shall execute and
deliver an instrument accepting such appointment and it shall thereupon be
deemed the Custodian hereunder and it shall without further acts be vested with
all the estates, properties, rights, powers, and duties of the predecessor
Custodian as if originally named as Custodian. Thereafter, the predecessor
Custodian shall be discharged for any further duties and liabilities under this
Agreement.
Section 10.7 CASH OFFSET. In lieu of having the number of Escrow Shares
reduced pursuant to the provisions of Section 10.2 and Section 10.5(b), the
Indemnifying Parties may elect to satisfy any claim of indemnity pursuant to
Section 10.1(a) in cash. To so elect, a Representative of the Indemnifying
Parties must deliver written notice of such election to the Custodian and the
claiming Indemnified Party and the Indemnifying Parties must actually make such
cash payment to the claiming Indemnified Party within five business days
following the later to occur of the delivery the election notice specified
herein, or, solely with respect to claims disputed pursuant to Section 10.5(c),
the agreement of the parties or other determination of a claim's validity
pursuant to Section 12.17 below. Xtend and the Xtend Shareholder shall have no
rights under this section to satisfy in cash any claims against the Escrow Fund
relating to the failure by the Xtend Business Unit to earn all of the Primary
Earn-Out Shares in accordance with the terms of Section 1.4(a) and EXHIBIT E.
ARTICLE XI
RESERVED
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ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.1 KNOWLEDGE. Unless otherwise specifically limited in the
applicable section, references to a party's "knowledge" in Articles II and III
above shall be interpreted to refer to the collective actual and constructive
knowledge of such party and such party's officers and directors, and in the case
of Xtend shall also be deemed to include the actual and constructive knowledge
of Mark Rapparport and Ejaz Afzal. For purposes of the preceding sentence,
"constructive knowledge" shall be deemed to represent those matters which in the
exercise of reasonable care would be within the party's knowledge.
Section 12.2 AMENDMENT AND MODIFICATION. To the fullest extent provided
by applicable law, this Agreement may be amended, modified and supplemented with
respect to any of the terms contained herein by written agreement of all parties
hereto.
Section 12.3 WAIVER OF COMPLIANCE. To the fullest extent permitted by
law, each of iGo, Sub and Xtend, or Mark Rapparport acting on behalf of the
Indemnifying Parties, may by an instrument in writing extend the time for or
waive the performance of any of the obligations of the others or waive
compliance by the others with any of the covenants, or waive any of the
conditions to its obligations, contained herein. No such extension of time or
waiver will operate as a waiver of, or estoppel with respect to, any subsequent
or other failure.
Section 12.4 NO WAIVER OF REPRESENTATIONS AND WARRANTIES. The
respective representations and warranties of each party hereto contained herein
will not be deemed to be waived or otherwise affected by any investigation made
by the other party hereto.
Section 12.5 NOTICES. All notices, requests, demands and other
communications required or permitted hereunder will be in writing and will be
deemed to have been duly given when delivered by hand or when mailed by
registered or certified mail, postage prepaid, or when given by facsimile
transmission (promptly confirmed in writing), as follows:
(a) If to iGo or Sub:
iGo Corporation
9393 Gateway Drive
Reno, NV 89511
Telephone No.: (775) 746-6140
Facsimile No.: (775) 850-9313
Attention: Chief Financial Officer
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with a copy to:
Hale Lane Peek Dennison Howard and Anderson
100 W. Liberty Street, 10th Floor
Reno, NV 89501
Telephone No.: (775) 327-3000
Facsimile No.: (775) 786-6179
Attention: David A. Garcia, Esq.
or to such other person as iGo or Sub designates in writing delivered to Xtend
in the manner provided in this Section 12.5;
(b) If to Xtend or the Xtend Shareholders:
Mark Rapparport
2435 Each Coast Highway, Suite 5
Corona del Mar, CA 92625
Telephone No.: (949) 566-7300
Facsimile No.: (949) 566-9556
with copies to:
Paul, Hastings, Janofsky & Walker LLP
695 Town Center Drive
Costa Mesa, CA 92626-1924
Telephone No.: (714) 668-6200
Facsimile No.: (714) 979-1921
Attention: Douglas A. Schaaf, Esq.
or to such other person as Xtend or the Xtend Shareholders designate in writing,
delivered to iGo in the manner provided in this Section 12.5.
Section 12.6 ASSIGNMENT. This Agreement and all of the provisions
hereof will be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder may be assigned by any
of the parties hereto without the prior written consent of the other parties.
Section 12.7 GOVERNING LAW. This Agreement and the legal relations
between the parties hereto will be governed by and construed in accordance with
the laws of the State of Delaware, without giving effect to the choice of law
principles thereof; PROVIDED, HOWEVER, that the law governing the fiduciary
duties of each party hereto and their respective boards of directors and the law
governing any other matters of internal corporate governance of any of iGo, Sub
or Xtend shall be the law of their respective jurisdictions of incorporation.
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Section 12.8 PARTIES IN INTEREST. Nothing expressed or implied in this
Agreement is intended or will be construed to confer upon or give to any person,
firm or corporation other than the parties hereto any rights or remedies under
or by reason of this Agreement or any transaction contemplated hereby, except as
specifically provided in this Agreement.
Section 12.9 COUNTERPARTS. This Agreement may be executed in two or
more counterparts and by the different parties hereto on separate counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
Section 12.10 HEADINGS AND REFERENCES. The headings of the sections
and articles of this Agreement are inserted for convenience of reference only
and will not by themselves determine the interpretation of this Agreement. All
references herein to sections and articles are to sections and articles of this
Agreement, unless otherwise indicated.
Section 12.11 ENTIRE AGREEMENT. This Agreement, including the Xtend
Disclosure Schedule and the iGo Disclosure Schedule, the schedules and exhibits
and other documents referred to herein which form a part hereof, the Rapparport
Employment Agreement and the Xtend Business Unit Operating Agreement, contain
the entire understanding of the parties hereto in respect of the subject matter
contained herein. There are no restrictions, promises, representations,
warranties, covenants, or undertakings with respect to the subject matter
contained herein, other than those expressly set forth or referred to herein.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
Section 12.12 SEVERABILITY. If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties further agree to replace such
invalid or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of the invalid and unenforceable provision.
Section 12.13 OTHER REMEDIES. Except as otherwise provided herein, any
and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby or by law
or equity on such party, and the exercise of any one remedy will not preclude
the exercise of any other.
Section 12.14 FURTHER ASSURANCES. Each party agrees to cooperate fully
with the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to evidence and reflect the transactions described
herein and contemplated hereby and to carry into effect the intents and purposes
of this Agreement.
-36-
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Section 12.15 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No provision
of this Agreement is intended, nor will be interpreted, to provide to create any
third party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, shareholder, employee, partner or any party hereto or any
other person or entity unless specifically provided otherwise herein, and,
except as so provided, all provisions hereof will be personal solely between the
parties to this Agreement.
Section 12.16 MUTUAL DRAFTING. This Agreement is the joint product of
iGo and Xtend, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of iGo and Xtend, and shall not be
construed for or against any party hereto.
Section 12.17 DISPUTE RESOLUTION.
(a) Except as me be set forth in paragraph (b) below, any
dispute or claim arising out of or in connection with this Agreement shall be
resolved as follows: (i) for a period of thirty (30) days after a dispute arises
the parties shall negotiate in good faith in an effort to resolve the dispute
and (ii) if the dispute has not been resolved at the close of such thirty-day
period, either party may submit the dispute or claim to binding arbitration by
one mutually acceptable arbitrator appointed in accordance with said rules;
provided that if the parties cannot agree on who is to serve as the arbitrator,
the dispute shall be resolved by a panel of three arbitrators, wherein each side
(iGo and Sub on the one hand, and Xtend and the Xtend Shareholders, on the
other) shall appoint one arbitrator and those arbitrators shall in turn jointly
appoint the third arbitrator. Any such arbitration shall be held in Washoe
County, Nevada under the Commercial Arbitration Rules of the American
Arbitration Association. The party prevailing in such arbitration proceeding
shall be entitled to have its costs and expenses in connection with such
proceeding reimbursed by the non-prevailing party; provided that if it is
ambiguous as to who the prevailing party in such proceeding is, then the costs
and expenses of such proceeding shall be apportioned in the manner provided for
in the arbitrator(s) determination. Judgment on an award rendered by an
arbitrator or arbitrators may be entered in any court having jurisdiction
thereof. Notwithstanding the foregoing, the parties may apply to any court of
competent jurisdiction for preliminary or interim equitable relief without
breach of this arbitration provision. To the extent applicable, written evidence
of the arbitrator(s)' decision shall promptly be submitted by the
Representatives to the Custodian pursuant to Section 10.5(c) above as evidence
of final determination of the disputed matter.
(b) Any dispute or claim arising out the accounting applicable
to calculations of the Earn-Out Shares (or any cash payable in substitute
thereof) shall be resolved as follows: (i) for a period of thirty (30) days
after a dispute arises the parties shall negotiate in good faith in an effort to
resolve the dispute and (ii) if the dispute has not been resolved at the close
of such thirty-day period, the matters in dispute will be submitted for
resolution to the national office of Ernst & Young LLP, or such other
independent accounting firm as may be mutually acceptable to the Representatives
of the parties hereto (the "Independent Accounting Firm") which shall within 30
calendar days of such submission determine and issue a written report to the
Representatives upon such disputed items and such written decision shall be
final and binding upon the parties.
-37-
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Any such written report shall promptly be submitted by the Representatives to
the Custodian pursuant to Section 10.5(c) above as evidence of the final
determination of the disputed matter. The parties agree to cooperate with each
other and each other's Representatives to enable the Independent Accounting Firm
to render a written decision as promptly as possible. The fees and disbursements
of the Independent Accounting Firm shall be borne 50% by iGo and 50% by the
Xtend Shareholders. The parties expressly agree that this paragraph is solely to
be invoked solely with respect to disputes regarding the accounting principles
or actual computations applicable in determining the appropriate amount of
Earn-Out Shares (or their financial equivalent), and that any disputes regarding
the parties' compliance with the terms of this Agreement or any other agreement
referenced herein or the conduct (or iGo's treatment) of the Xtend Business Unit
during the measurement period shall be determined pursuant to Section 12.17(a)
above.
[Signature Page Follows]
-38-
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be duly executed as of the date and year first written above.
IGO CORPORATION XTEND MICROPRODUCTS, INC.
By: /s/ Mick Delargy By: /s/ Mark Rapparport
--------------------------- ------------------------
Mick Delargy Mark Rapparport
Chief Financial Officer President
XMP ACQUISITION CORP.
By: /s/ Mick Delargy
---------------------------
Mick Delargy
Chief Financial Officer
XTEND SHAREHOLDERS:
/s/ Mark Rapparport /s/ Tom Taylor
------------------- --------------
MARK RAPPARPORT TOM TAYLOR
-39-
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT A*
----------
XTEND PRODUCTS
--------------
See attached list of products.
------------------
* To be filed by amendment.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT B
---------
TANGIBLE ASSETS
---------------
See attached list of tangible assets.
<PAGE>
<TABLE>
CONFIDENTIAL TREATMENT REQUESTED
Xtend Micro Products
Asset Listing
As of July 12, 2000
<CAPTION>
Estimated
Date of Purchase Future Market Amount
Category Acquisition Description Vendor Cost Life (mo.s) Value Owed Comment
TOOLING
<S> <C> <C> <C> <C> <C> <C> <C> <C>
5 06/25/1997 Tooling - 50/60W cable & piece
part 35 cbl Craftech 60,556 12 20,000
5 06/25/1997 Tooling - 60W top&bottom Craftech/Lease 34,318 12 10,000 9,745 GE Capital lease
304791001 ends
6/30/2001
5 11/30/1997 Tooling - E710 output cable Far East 1,400 24 -
5 03/01/1998 Tooling - Eurotip Adapter Brevet Industries 10,182 12 5,000
5 05/01/1998 Tooling - E607 output cable Far East 5,000 24 -
5 06/01/1998 Tooling - E209 output cable Far East 1,300 0 -
5 08/30/2000 Monitor stand mold Craftech 63,034 48 63,000 12,600 Being paid weekly
5 02/09/1999 Tooling - retainer Craftech 2,100 12 -
5 06/22/1999 Plastic design - 60Watt Coast Prod Dev 11,925 48 10,000
5 08/01/1999 AC&DC adaptor design Industrial Design 3,000 48 3,000
5 11/03/1999 Port Replicator, Phase 1 & 2 Craftech 6,200 0 -
5 12/03/1999 Tooling - heat sink Foxlink 2,380 48 2,380
5 12/17/1999 Tooling - DC adaptor Foxlink 7,921 48 7,921
5 12/28/1999 Ultrasonic Horn H&R Plastics 1,832 48 1,832
5 01/10/2000 Tooling - 35 cable Foxlink 18,600 48 18,600 12,400 1/3 down, 1/3 first
article, 1/3 amortized
units TBD
5 01/20/2000 DVD design Coast Prod Dev 781 48 781
5 01/27/2000 Tooling - DVD strain relief Foxlink 3,675 48 3,675
5 01/27/2000 Tooling - 60w heatsink Foxlink 2,380 48 2,380
5 01/27/2000 Tooling - DVD heatsink Foxlink 1,270 48 1,270 1,270 1/3 down, 1/3 first
article, 1/3 amortized
units TBD
5 01/27/2000 Tooling - 60w top/bottom Foxlink 9,500 48 9,500 6,334 1/3 down, 1/3 first
article, 1/3 amortized
units TBD
5 01/27/2000 Tooling - DVD plastic cover Foxlink 9,500 48 9,500 9,500 1/3 down, 1/3 first
article, 1/3 amortized
units TBD
5 09/01/2000 Tooling - cigarette adapter Grizzle 56,000 60 56,000 29,000 New project initiated
30 days ago. Making
weekly pymts
--------- -------- --------
312,853 224,839 80,849
</TABLE>
<PAGE>
<TABLE>
CONFIDENTIAL TREATMENT REQUESTED
Xtend Micro Products
Asset Listing
As of July 12, 2000
<CAPTION>
Estimated
Date of Purchase Future Market Amount
Category Acquisition Description Vendor Cost Life (mo.s) Value Owed Comment
TOOLING
FURNITURE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 05/29/1996 AT&T Phone System 21,811 36 10,000 -
Furn, desks, chairs, file cabinets 20,000 36 10,000 -
------- ------- -----
41,811 20,000 -
</TABLE>
<PAGE>
<TABLE>
CONFIDENTIAL TREATMENT REQUESTED
Xtend Micro Products
Asset Listing
As of July 12, 2000
<CAPTION>
Estimated
Date of Purchase Future Market Amount
Category Acquisition Description Vendor Cost Life (mo.s) Value Owed Comment
TEST EQUIPMENT
<S> <C> <C> <C> <C> <C> <C> <C> <C>
4 04/12/1999 Vahalle 2102 Digital Power Analyzer 1,001 36 750
4 04/02/1995 Tektronix AM503B 2,673 36 1,500
4 02/11/1997 Com-Power Analyzer SA510 3,954 36 1,000
4 1/97 Sato label printer 2,800 36 1,000
4 Tek DMM850 900 36 300
4 Fluke 73 210 36 70
4 Fluke 73 210 36 70
4 Fluke 77 210 36 70
4 Fluke 52 210 36 70
4 Fluke 73 210 36 70
4 Fluke 70 210 36 70
4 Fluke 8050A 600 36 200
4 Power supply 250W 1,500 36 500
4 Tektronix PS281 900 36 300
4 Tektronix PS281 900 36 300
4 Tektronix PS280 900 36 300
4 Tektronix PS282 1,200 36 400
4 Samlex RPS1204 150 36 50
4 Scope Tek 2232 7,500 36 2,500
4 Scope Tek TDS350 10,500 36 3,500
4 Scope Tek 465B 2,250 36 750
4 Genrad 1689 9,000 36 3,000
4 07/13/1998 Test Fixture (Amistar)HP ps and load Lease 6,000 36 3,161 Lease First Sierra
067691000203 ends
7/13/2001
4 Test Fixture (ASE)HP ps and load Lease 6,000 36 6,000 MTM rental Electro Rent
& Newcourt Financial
-------- -------- -------
59,988 16,770 9,161
</TABLE>
<PAGE>
<TABLE>
CONFIDENTIAL TREATMENT REQUESTED
Xtend Micro Products
Asset Listing
As of July 12, 2000
<CAPTION>
Estimated
Date of Purchase Future Market Amount
Category Acquisition Description Vendor Cost Life (mo.s) Value Owed Comment
SOFTWARE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3 Macola V7.50,V6.20 11 modules 15 users 53,723 36 20,000 Y2K compliant
3 06/11/1997 McAfee Netshield 2,438 36 1,219
3 03/06/1996 Cadware 2,155 36 1,078
3 09/30/1997 PT Modeler Software 5,037 36 2,519 - Lease First Sierra
06791000202 ends
9/16/2000
3 09/30/1996 Novell license 5,000 36 2,500
3 09/30/1996 Windows NT 4.0 & Windows exchange servr 5,000 36 2,500
3 09/30/1996 Telemagic 5,000 36 2,500
3 03/28/1995 Pro Jr Software 8,640 36 4,320
-------- -------- ----
86,993 36,635 -
</TABLE>
<PAGE>
<TABLE>
CONFIDENTIAL TREATMENT REQUESTED
Xtend Micro Products
Asset Listing
As of July 12, 2000
<CAPTION>
Estimated
Date of Purchase Future Market Amount
Category Acquisition Description Vendor Cost Life (mo.s) Value Owed Comment
HARDWARE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2 05/28/1999 10 Nexcom PC's NexCom 7,237 24 2,412
2 11- 17" monitors, NEC , Dell, CTX, Vson Various 6,600 24 2,200
2 11/30/1997 Okidata line printer 1,527 24 509
2 07/02/1995 Apple Mac Performa 6205CD, monitor 4,465 24 1,488
2 12/01/1994 HP LaserJet 4si 3,342 24 1,114
2 08/11/1995 Epson DFX-8000 Line printer 2,845 24 948
2 09/30/1997 2 - Dell P200 PC with Ultra Scan monitor Lease 13,296 24 4,432 918 Lease First Sierra
067691000201 ends
10/14/2000
2 03/31/1997 Compaq Proliant 800 server Lease 12,059 24 4,020 4,904 G.F. Funding
0008553-001 ends
2/28/2002
2 02/05/1997 2-P2002 PC w/ CTX vl700 monitors Lease 5,021 24 1,674 - Lease Sanwa Bank
002-1211622-000
ended 2/4/2000
2 05/30/1997 Dell 233 PC w/ ultrascan monitor Lease 3,544 24 1,181 - Lease Sanwa Bank
002-1232129-000
ended 5/30/2000
2 06/19/1997 3- Dell 5133/GS+L PC no monitor Lease 3,973 24 1,324 - Lease Sanwa Bank
002-1234275-000
ended 6/30/2000
2 10/05/1992 IBM Laser Printer 916 24 305
2 09/30/1994 Panasonic KX-P1123 211 24 70
2 12/01/1997 4-Toshiba laptop computers Lease 7,153 24 2,384 931 Lease Advanta
062-0340047-001
ends 12/1/2000
2 03/31/1999 Compaq Proliant 1600 P2-server 9,138 24 3,046
2 03/31/1999 Thinkpad 770 w/cd Rom 1,615 24 538
2 04/21/1999 Thinkpad 600E P2 2,764 24 921
2 Compaq Prosignia 500 Server 6,000 24 2,000
2 HP LaserJet 5MP 500 24 167
2 HP LaserJet IIIsi 4,000 24 1,333
-------- ------- --------
96,206 32,069 6,752
</TABLE>
<PAGE>
<TABLE>
CONFIDENTIAL TREATMENT REQUESTED
Xtend Micro Products
Asset Listing
As of July 12, 2000
<CAPTION>
Estimated
Date of Purchase Future Market Amount
Category Acquisition Description Vendor Cost Life (mo.s) Value Owed Comment
SHOW BOOTH
<S> <C> <C> <C> <C> <C> <C> <C> <C>
04/22/1992 Show Booth 67,348 48 20,000 -
-------- ------
</TABLE>
<PAGE>
<TABLE>
CONFIDENTIAL TREATMENT REQUESTED
Xtend Micro Products
Asset Listing
As of July 12, 2000
<CAPTION>
Date of
Category Acquisition Description Comment
<S> <C> <C> <C>
Product Designs
6 72 watt DC Auto Air Adapter
6 60 watt DC Auto Air Adapter
6 35 watt DC Auto Air Adapter
6 18 watt DC DVD Auto Air Adapter
6 60 watt AC Adapter
6 Auto Air Cigarette Plug
6 Notebook computer battery for Toshiba T1900
6 Notebook computer battery for Toshiba T2100
6 Notebook computer battery for IBM Thinkpad 365
6 Notebook computer battery Duracell DR31
6 Notebook computer battery Texas Instruments Extensa 550/555
6 Xtend Notebook Battery Charger C205
6 Xtend Notebook Battery Charger C404
6 Monitor Stand 3 Piece Design
6 "Ground Control Technologies LLC" motorized port replicator designs
</TABLE>
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT C
---------
INTANGIBLE ASSETS
-----------------
1. See Schedule 2.13 for list of trademarks and patents of Seller.
2. Goodwill of Seller.
3. The assets contributed by Ground Control Technologies, LLC to
Seller, including, any and all (i) rights to intellectual property,
and (ii) research, product plans, products, services, developments,
processes, designs, drawings and engineering relating to the
mechanical and industrial design for a motorized port-replicator,
used as a laptop computer docking station. Neither Ground Control
Technologies, LLC or Seller has applied for or registered any
intellectual property for these assets.
4. Web-Sites Registered to Seller
------------------------------
a. XMPI.com
b. PowerXtender.com
c. Xtendmicro.com
d. extendmicro.com
5. Web-Sites Registered to Mark N. Rapparport
------------------------------------------
a. Workmobile.com
b. Mobileoutpost.com
6. All "HTML" code on the above-listed web-sites, including, but not
limited to, all photo and image assets, marketing information and
product databases.
7. Seller's phone numbers, including Seller's main phone number ((949)
566-7300), DID direct internal lines, main facsimile number ((949)
566-9956), Mark N. Rapparport's private facsimile number ((949)
566-9951), the accounting department phone number ((949) 566-9954),
Seller's toll-free number ((800) 232-9856) and Seller's Delta
Airline numbers, including, but not limited to, (888) 983-6301 and
(847) 371-2430 and Seller's United Airline numbers, including, but
not limited to, (888) 258-7721 and (949) 660-7376.
8. All collateral literature and content, including, but not limited
to, product guides, advertisements, retail packaging, data sheets
and trade show materials and graphics.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT D
---------
ASSIGNED CONTRACTS
------------------
1. Distribution Agreement between Seller and Ingram Micro Inc., dated
July 31, 1996.*
2. Distribution Agreement, as amended, between Seller and Tech Data
Product Management, Inc., dated March 31, 2000.*
3. Joint Marketing Agreement between Seller and United Air Lines, Inc.,
dated December 1, 1997.*
4. Joint Marketing Agreement between Seller and Delta Air Lines, Inc.,
dated October 6, 1997.*
5. Lease agreement between Seller and Canon Financial Services, Inc.,
dated January 11, 1996.**
6. Manufacturer's Representative Agreement between Seller and Consumer
Sales & Marketing, dated February 3, 2000.**
7. Lease Agreement, as amended, between Seller and Prolease, dated
March 11, 1997.***
8. Lease Agreements between Seller and First Sierra Software Finance,
dated September 16, 1997, October 15, 1997 and July 13, 1998,
respectively.***
9. Lease Agreements between Seller and Advanta Business Services Corp.,
dated December 10, 1997.***
10. Lease Agreements between Seller and Sanwa Leasing Corporation, dated
February 5, 1997, May 30, 1997, June 19, 1997, respectively.***
11. Lease Agreement between Seller and Preferred Capital Corporation,
dated June 13, 1997.***
12. Standard Industrial/Commercial Multi-Tenant Lease between Seller and
B.E.S.T. Pension Administrators, dated August 26, 1999.***
13. Lease between Seller and Schroeder Management Company, dated June
12, 2000.***
14. Distributor Agreement, as amended, between Seller and Merisel
Americas, Inc., dated April 14, 1997.***
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
15. Vendor Agreement, as amended, between Seller and Office Depot,
Inc.***
16. Distributor Agreement between Seller and MITO Corporation, dated
September 17, 1999.***
17. Manufacturer's Representative Agreement between Seller and Thal
Organization, dated March 1, 2000.**
18. Reseller Agreeement between Seller and Teleadapt Ltd.***
* Seller will obtain consent to assignment prior to closing.
** Consent to assignment not required.
*** Seller will not obtain any consents to assignments of these
agreements prior to closing. Seller will use commercially reasonable
efforts to obtain consents to assignment of these agreements
post-closing.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT E
EARN-OUT PROVISIONS
Minimum Net Minimum
Revenue of Gross Minimum Approximate Approximate
Hurdle Hurdle Margin % EBITDA % of Stock Rating Earn Out
# % Plan (in $1,000's) of Hurdle Hurdle Earned Factor Stock
1 75% $ [*] [*] [*] 52.5% 70% $ 2,677,500
2 83% $ [*] [*] [*] 75% 90% $ 3,825,000
3 100% $ [*] [*] [*] 100% 100% $ 5,100,000
A. Application.
------------
i. The provisions of this Exhibit are applicable to the calculation of
Earn-Out Shares that Xtend will be entitled to retain ownership of pursuant to
Section 1.4 of the Agreement. Except as separately defined herein, the meanings
of terms defined in the Agreement shall carry over to this exhibit.
ii. Upon expiration of the Escrow Holdback Period, the Escrow Agent
shall deliver to Xtend (or its successor(s) in interest) the Earned Primary
Earn-Out Shares less any deductions thereto resulting from application of
Sections 1.3 or 1.4(v) or Article X of the Agreement (the "OFFSET PROVISIONS").
The difference between the Primary Earn-Out Shares originally escrowed and the
Earned Primary Earn-Out Shares, as well as any escrowed Primary Earn-Out Shares
forfeited pursuant to the operation of the Offset Provisions, shall be delivered
to iGo promptly upon determination thereof, after which they will be cancelled
and revert to the authorized but unissued stock of iGo.
B. Calculation of the Earned Primary Earn-Out Shares
-------------------------------------------------
i. To receive and retain ANY shares under the Primary Earn-Out, the
Xtend Business Unit must achieve (a) BOTH the minimum Net Revenue Hurdle and the
Minimum Gross Margin Hurdle for the Measurement Period, AND (b) the Quarterly
Performance Standards for at least three of the quarters of the Measurement
Period (taking into account the effect of paragraph (B)(ii) below). All Earn-Out
Shares will be forfeited in the event that the Xtend Net Revenues for the
Measurement Period are less than [*] or if the Gross Margin on the Xtend Net
Revenues is less than [*] percent (i.e. there will be no Earned Primary Earn-Out
Shares, as defined below, hereunder). If in any quarter during the Measurement
Period the Xtend Business Unit fails to meet the applicable Quarterly
Performance Standards, 50 percent of its Earned Primary Earn-Out Shares will be
forfeited. If the Xtend Business Unit fails to meet the applicable Quarterly
Performance Standards during an additional quarter of the Measurement Period,
all remaining Earned Primary Earn-Out Shares will be forfeited. The figures and
headings set forth in the table at the top of this exhibit shall apply to the
calculation of the Earned Primary Earn-Out Shares to be retained by Xtend under
the Agreement.
-1-
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
ii. For purposes of meeting the Quarterly Performance Standards only,
and not for calculation of the Earned Primary Earn-Out Shares, Xtend shall be
entitled to carry forward, from each quarter of the Measurement Period (the
"PRIOR QUARTER") to the next quarter of the Measurement Period, any portion of
the Xtend Net Revenue for the Prior Quarter that exceeds the minimum Xtend Net
Revenue necessary to satisfy the Quarterly Performance Standards for the Prior
Quarter (such excess being referred to as the "CARRY-FORWARD NET REVENUE"). The
Carry-Forward Net Revenue shall be deemed to be at the Gross Margin for the
Prior Quarter.
iii. Subject to meeting the minimum hurdles, the dollar amount (the
"EARN-OUT DOLLARS") used to calculate the Primary Earn-Out Shares actually
earned by Xtend (the "EARNED PRIMARY EARN-OUT SHARES") will be determined by (a)
dividing the Xtend Net Revenue by [*], then (b) multiplying the result by the
Rating Factor for the highest Hurdle achieved (1, 2 or 3) and then (c)
multiplying the product by $5,100,000.
iv. The actual number of Earned Primary Earn-Out Shares will be
determined by dividing the Earn-Out Dollars by the Average Trading Price.
EXAMPLE. Assume for purposes of this example only that the deemed Average
Trading Price was $4 per share. If the Xtend Business Unit generated $11.5
million in Net Revenue at a 37 percent Gross Margin during the Measurement
Period and met all of its Quarterly Performance Standards, the Earned Primary
Earn-Out Shares would be calculated as follows:
((11,500/14,366) x 70 percent) x $5,100,000 = $2,857,789.22 which would
then be divided by $4 to generate 714,447 Earned Primary Earn-Out
Shares.
C. Pro-ration of Payments
----------------------
In the event that a Triggering Event specified in Section 1.4(a)(vi) of
the Purchase Agreement occurs causing the acceleration of the calculation of the
Earn-Out payments, the Primary, Bonus I, and Bonus II Earn-Outs will be
determined by measuring the actual performance of the Xtend Business Unit during
the period up to and including the measurement date against the performance
standards set forth in this EXHIBIT E to the Purchase Agreement or in Sections
1.4(a)(iii) or (iv) of the Purchase Agreement pro-rated over the same period of
time (pro rating across completed quarters, then full months, then business days
within a month during the Measurement Period). Recognizing that the parties do
not anticipate that the Xtend Business Unit's performance each quarter of the
Measurement Period will correspond directly to one-fourth of the annual targets,
in any such pro-ration calculation, the Quarterly Revenue Targets and, with
respect to calculating the Bonus I and II Earn-Outs only, the Quarterly Gross
Margin and EBITDA Targets will be used to measure the actual performance of the
Xtend Business Unit in comparison to such fixed dollar amounts. All fixed dollar
figures will be reduced ratably in intra-quarter measurements, but all
percentage thresholds shall be applied as a constant over all periods. For
purposes of assessing achievement of the fixed dollar annual thresholds in the
Bonus I and Bonus II Earn-Outs, the actual performance of the Xtend Business
Unit as compared to the Target amounts for the interim period shall then be
annualized against the sum of the Target amounts for all four quarters of the
Measurement Period.
-2-
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Furthermore, any applicable minimum quarterly performance standards shall apply
in full for completed quarters and shall be pro-rated across partial quarters.
Notwithstanding the foregoing, if a Triggering Event occurs on any day other
than the final day of any quarter (first three calendar months, next three
calendar months, etc.) of the Measurement Period, then the actual performance of
the Xtend Business Unit shall either be measured up to and through the last day
of the preceding quarter or up to and through the date of the Triggering Event,
whichever measurement would entitle Xtend to the greater number of Earn-Out
Shares.
For an example of the application of pro-rated Earn-Out calculations, please see
Schedule A hereto.
D. Definitions.
------------
"XTEND NET REVENUE" shall mean the sum of (i) Distribution Customer Net Revenue,
(ii) Regular Customer Net Revenue, (iii) New Distribution Customer Net Revenue,
and (iv) Mark-Up Intercompany Net Revenue. Except as otherwise provided in the
definition of Regular Customer Net Revenue, in no event will direct-to-corporate
or direct-to-consumer sales be counted as sales of the Xtend Business Unit, as
all such customers will be serviced by iGo. In addition, Xtend Net Revenue shall
not be affected by Non-Mark-Up Intercompany Sales.
"COST OF GOODS SOLD" shall mean the cost of product plus freight-in, import
duties, packaging costs, freight-out, amortization of tooling costs (solely to
the extent of tooling liabilities assumed by iGo and Sub in the Asset Purchase
or costs or liabilities associated with tooling specifically acquired for the
Xtend Business Unit during the Measurement Period) and a reasonable provision
for inventory shrinkage and obsolescence (which provision shall be applicable to
product sold by the Xtend Business Unit rather than a pro rata proportion of
iGo's consolidated obsolescence provision), each as may be applicable to the
product sales generating the Xtend Net Revenue. Tooling costs will be amortized
based upon (i) a useful life of eighteen months (which for tooling acquired in
the Asset Purchase will run from the date of the closing of the Asset Purchase
if such tooling is already used in production or will run from the date such
acquired tooling begins being used in production, and for tooling acquired
during the Measurement Period will run from the date of the first sale of
product produced with the new tooling) or (ii) such other period as the
Representatives of the parties may mutually agree upon for newly acquired
tooling. Tooling cost amortization will be applied on a per-unit basis based on
the sales projections underlying the Xtend Business Unit "full plan" budget. The
provision for inventory shrink and obsolescence shall be calculated on a
quarterly basis and shall include a 100% reserve for all on-hand inventory in
excess of 90 days' supply (on a per sku basis, based on 90-day trailing sales,
except in the case of Distribution Customers or New Distribution Customers, in
which case it will be based on trailing sell-through) except that (a) cable
inventory shall be calculated on a 180 days' supply and (b) if the product was
introduced within the prior 90 days and as a result has no significant sales
history or is being stocked for a new customer, inventory of such product will
not be reserved for as excess inventory to the extent that prior to their
placement, iGo reviewed and approved purchase orders for such product, which
approval will not be unreasonably withheld provided that the associate forecasts
are deemed reasonable.
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CONFIDENTIAL TREATMENT REQUESTED
"DISTRIBUTION CUSTOMER" shall mean an Xtend Business Unit customer which has the
contractual right to return to the Xtend Business Unit, other than for warranty
purposes, more than 10 percent of the previous quarter's purchases by that
customer and whose primary business is the purchase of inventory for resale in
the ordinary course of business. A list of current and prospective Distribution
Customers is set forth on Exhibit D to the Xtend Business Unit Operating
Agreement (the "Operating Agreement").
"DISTRIBUTION CUSTOMER NET REVENUE" shall mean for customers designated as
Distribution Customers and for classes of products identified on Exhibit D to
the Operating Agreement the lesser of (a) sell-through by Distribution Customers
of products purchased from the Xtend Business Unit or (b) sell-in by the Xtend
Business Unit to Distribution Customers, reduced by Excess Channel Inventory at
the end of each quarter of the Measurement Period, and further reduced by the
value of actual returns processed during each quarter of the Measurement Period
(other than returns called for under RMA's issued prior to the Closing as
mutually agreed by Xtend and iGo, the financial responsibility will remain with
Xtend following the Closing) and the value of defective products still held by
the customer at the close of each quarter of the Measurement Period (provided
that the first $50,000 of returns incurred over the entire one year Measurement
Period, will not be counted as a reduction to Net Revenue).
"EBITDA" shall mean the earnings of the Xtend Business Unit before application
of interest, taxes, depreciation and amortization, calculated in accordance with
generally accepted accounting principles as consistently applied by iGo with
respect to its other business units (except to the extent modified by the
agreed-upon terms of this Exhibit). Bad debt expense shall include actual
write-offs and a reasonable provision for expected write-offs in the applicable
period (100 percent of all accounts in excess of 90 days past due, except for
Ingram which will only be considered a bad debt once over 150 days past due).
The 90 day test shall be applied on a rolling basis.
"EXCESS DISTRIBUTION CHANNEL INVENTORY" shall mean, for each Distribution
Customer and for each Xtend Business Unit product held by such customer, an
amount equal to the excess of (i) the actual inventory held by such customer
over (ii) the greater of (a) the total amount of product sold by such customer
for the prior eight week period or (b) if the product was introduced within the
prior 90 days and as a result has no significant sell-through history, a
reasonable amount mutually agreed upon by Rapparport and iGo based on past
sell-through history with similar classes of products to the same customer.
"GROSS MARGIN" shall mean Xtend Net Revenue less Cost of Good Sold expressed as
a percentage of the Xtend Net Revenue.
"INTERCOMPANY SALES"" shall mean sales of iGo products by iGo to the Xtend
Business Unit at cost and sales of Xtend Business Unit products by the Xtend
Business Unit to iGo at cost.
"MARK-UP Intercompany Net Revenue" shall mean an amount of revenue necessary to
achieve a Gross Margin of [*] percent on Mark-Up Intercompany Sales.
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<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
"MARK-UP INTERCOMPANY SALES" shall mean Intercompany Sales of proprietary
products designed by the Xtend Business Unit, where the Xtend Business Unit (and
derivatively, iGo) has exclusive ownership rights in the tooling or design for
such product.
"NEW DISTRIBUTION CUSTOMER" shall mean an Xtend Business Unit customer which (i)
has the contractual right to return to the Xtend Business Unit, other than for
warranty purposes, more than 10 percent of the previous quarter's purchases for
that customer, (ii) whose primary business is the purchase of inventory for
resale in the ordinary course of business, and (iii) whose revenue for the
applicable period of calculation occurred within a portion of the Ramp-Up
Period. A list of current and prospective Distribution Customers is set forth on
Exhibit D to the Operating Agreement.
"NEW DISTRIBUTION CUSTOMER NET REVENUE" shall mean for customers designated as
New Distribution Customers and for classes of products identified on Exhibit D
to the Operating Agreement the lesser of (a) sell-through by New Distribution
Customers of products purchased from the Xtend Business Unit or (b) sell in by
the Xtend Business Unit to New Distribution Customers, reduced by Excess Channel
Inventory at the end of each quarter of the Measurement Period and further
reduced by the value of actual returns processed during each quarter of the
Measurement Period (other than returns called for under RMA's issued prior to
the Closing as mutually agreed by Xtend and iGo, the financial responsibility
will remain with Xtend following the Closing) and the value of defective
products still held by the customer at the close of each quarter of the
Measurement Period. However, if this calculation (prior to making further
reduction for actual returns or defective products in possession in the case of
clause (b)) yields a result that is less than 75 percent of the sell-in amount,
75 percent of the sell-in amount shall be used provided the shipment roll-out
for new customers is approved in advance by iGo, such approval to not be
unreasonably withheld.
"NON-MARK-UP INTERCOMPANY SALES" shall mean all Intercompany Sales other than
Mark-Up Intercompany Sales.
"QUARTERLY REVENUE TARGETS" shall mean [*] of Xtend Net Revenue for the first
quarter of the Measurement Period, [*] of Xtend Net Revenue for the second
quarter of the Measurement Period, [*] of Xtend Net Revenue for the third
quarter of the Measurement Period and [*] of Xtend Net Revenue for the fourth
quarter of the Measurement Period.
"QUARTERLY GROSS MARGIN TARGETS" shall mean [*] of Gross Margin for the first
quarter of the Measurement Period, [*] of Gross Margin for the second quarter of
the Measurement Period, [*] of Gross Margin for the third quarter of the
Measurement Period and [*] of Gross Margin for the fourth quarter of the
Measurement Period.
"QUARTERLY EBITDA TARGETS" shall mean [*] of EBITDA for the first quarter of the
Measurement Period, [*] of EBITDA for the second quarter of the Measurement
Period, [*] of EBITDA for the third quarter of the Measurement Period and [*] of
EBITDA for the fourth quarter of the Measurement Period.
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<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
"QUARTERLY PERFORMANCE STANDARDS" for the applicable quarter of the Measurement
Period (first three calendar months, next three calendar months, etc.) shall
mean: (a) [*] percent Gross Margin for the quarter, (b) EBITDA equal to at least
[*] percent of the quarter's Xtend Net revenue, and (c) in the first quarter,
[*] in Xtend Net Revenue, in the second and third quarters [*] in Xtend Net
revenue, and in the fourth quarter [*] in Xtend Net Revenue.
"RAMP-UP PERIOD" shall mean the first 180-day period from when the initial
product was shipped to the relevant New Distribution Channel Customer by the
Xtend Business Unit.
"REGULAR CUSTOMER" shall mean all customers of the Xtend Business Unit other
than Distribution Customers, New Distribution Customers, corporate direct
customers and end-users. A list of current and prospective Regular Customers is
set forth on Exhibit D to the Operating Agreement.
"REGULAR CUSTOMER NET REVENUE" shall mean gross product and shipping revenues
booked by the Xtend Business Unit of iGo during the applicable portion of the
Measurement Period less a reasonable provision for returns and markdowns based
on historic data less the value of actual returns processed during each quarter
of the Measurement Period (other than (a) returns called for under RMA's issued
prior to the Closing as mutually agreed by Xtend and iGo, the financial
responsibility will remain with Xtend following the Closing or (b) returns for
which reasonable provision has already been made under this program) and the
value of defective products still held by the customer at the close of each
quarter of the Measurement Period. For purposes of the preceding sentence, the
gross product and shipping revenues booked by the Xtend Business Unit shall
consist of:
(a) all sales booked by the Xtend Business Unit to Regular
Customers,
(b) all sales resulting from the United and Delta contracts,
and other similar contracts executed by or secured as a
result of the efforts of the Xtend Business Unit,
(although the airline contracts will be serviced by iGo,
the Xtend Business Unit will receive credit for the sale
of Xtend DC adapters based on the then-current wholesale
price for such products to Ingram Micro)
(c) all sales by iGo or the Xtend Business Unit to current or
prospective Regular Customers of the Xtend Business Unit
set forth on EXHIBIT D for THE CLASSES OF PRODUCTS
OUTLINED ON EXHIBIT D to the Operating Agreement
(provided, however, that sales by iGo pursuant to this
provision will be deemed to have occurred at the greater
of (i) the actual price level or (ii) the Mark-Up
Intercompany Net Revenue price level), except to the
extent provided otherwise in Exhibit D to the Operating
Agreement,
(d) to the extent that the Ingram Micro, Inc. account is
handled by sales people outside of the Xtend Business
Unit, all sales of laptop batteries, AC adapters and DC
adapters to Ingram Micro, Inc.,
(e) all iGo sales of non-Xtend Business Unit Products (meaning
products not already purchased by iGo from the Xtend
Business Unit) and laptop batteries with the Xtend Brand
Name (provided, however, that sales by iGo pursuant to
this provision will be deemed to have occurred at the
greater of (i) the actual price level or (ii) the Mark-Up
Intercompany Net Revenue price level),
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<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(f) iGo sales of DC adapters, AC adapters and laptop batteries
to State Farm Insurance Company (provided, however, that
such sales by iGo will be deemed to have occurred at the
greater of (i) the actual price level or (ii) the Mark-Up
Intercompany Net Revenue price level),
(g) iGo sales of Xtend Business Unit products which result
directly from sales leads generated by the Xtend Business
Unit (provided, however, that such sales by iGo will be
deemed to have occurred at the greater of (i) the actual
price level or (ii) the Mark-Up Intercompany Net Revenue
price level); and
(h) iGo sales of products to which the Xtend Business Unit has
secured exclusive distribution rights (which sales will be
deemed to have occurred at a mutually agreed upon
intercompany mark-up price level determined on a
product-by-product basis based on the margin of the
particular product and the nature and scope of the
exclusive relationship with the manufacturer)
"SELL THROUGH REPORTS" shall mean the periodic reports received from New
Distribution Channel Customers and Distribution Customers that provide
information concerning the resale of products purchased from the Xtend Business
Unit or Xtend Micro Products, Inc.
"XTEND BUSINESS UNIT" shall mean the internal operations of the Xtend/iGo
offices in the Southern California area, together with any iGo personnel
resident in iGo's headquarter offices but working principally on Xtend Business
Unit business (be it sales, product development or otherwise). It is the
parties' intentions that the Xtend Business Unit encompass the continuation and
agreed-upon expansion of the business acquired by iGo from Xtend Micro Products,
Inc.
E. Miscellaneous.
--------------
(i) Nothing herein shall give any individual any employment rights or
in any manner alter such person's "at will" employment status with iGo or its
subsidiaries.
(ii) To the extent not listed herein, the standards by which the Xtend
Business Unit shall operate are set forth in the Xtend Business Operating
Agreement agreed upon by the parties.
(iii) The parties acknowledge that it may be beneficial for the Xtend
Business Unit to sell iGo or Road Warrior products in addition to Xtend Business
Unit products to customers of the Xtend Business Unit that iGo or a business
unit thereof does not already service, in which case such sales would fall
within the category of Distribution Customer Net Revenue, New Distribution
Customer Net Revenue or Regular Customer Net Revenue, such classification to be
made based upon the contractual rights of return held by such customer with
respect to products acquired from the Xtend Business Unit.
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<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE A
EARN-OUT PRO RATION EXAMPLES
EXAMPLE I. Assume for the purpose of this example only that the Triggering Event
occurs at the end of the seventh month of the Measurement Period. Further assume
that the actual results (in thousands except for percentages) of the Xtend
Business Unit are as follows:
--------------------------------------------------------------------------------
EXAMPLE ONE ASSUMED ACTUAL RESULTS Complete Q's Only
Partial
Q1 Q2 Q3 Cum % of Cum % of
-- -- -- --- ---- ---- ----
Month 1-3 Month 4-6 Month 7 Months 1-6 Targets Months 1-7 Targets
--------- --------- ------- ---------- ------- ---------- -------
Net Revenue [*] [*] [*] [*] 108% [*] 104%
Gross Margin [*] [*] [*] [*] 118% [*] 116%
EBITDA [*] [*] [*] [*] 129% [*] 117%
Gross Margin % [*] [*] [*] [*] n/a [*] n/a
EBITDA % [*] [*] [*] [*] n/a [*] n/a
--------------------------------------------------------------------------------
In this instance the Xtend Business Unit has met the minimum hurdles established
by the Quarterly Performance Standard for each of the fully completed quarters
and the one month stub period (the seventh month). In addition the Xtend
Business Unit has met the Quarterly Revenue, Quarterly Gross Margin and
Quarterly EBITDA targets for the first and second quarter (the measure of the
Bonus I and Bonus II), but not for the one month stub period. Because the Xtend
Business Unit's actual performance relative to the Targets is greater through
the second quarter than through the full seven months, the primary earn out and
special bonus payout amounts will be greater based on the cumulative first and
second quarter results rather than the cumulative results for all seven months.
Therefore, only the first and second quarters would be considered for the
calculation. The corresponding Earn-Out Calculations are as follows:
PRIMARY EARN-OUT: (([*]/[*]) x 100%) x $5,100,000 = $5,514,933 = $5,100,000 MAX
BONUS I EARN-OUT: Revenue through two quarters is at 108% of Target annual rate
of [*], so annualized would be [*], and in excess of the required [*]. Gross
Margin is [*] of the Target rate of [*], so annualized would be [*], and in
excess of the required [*]. EBITDA is 129% of Target rate of [*], so annualized
would be [*], and in excess of the required [*]. Accordingly, Bonus I Earn-Out =
$500,000
BONUS II EARN-OUT: Bonus I Earn-Out is qualified for. EBITDA through two
quarters is at 129% of the Target rate of [*], so annualized would be [*]. The
excess of annualized EBITDA is [*]. Accordingly, Bonus II Earn-Out = 150% x [*]
= [*]
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CONFIDENTIAL TREATMENT REQUESTED
EXAMPLE II. Assume for the purpose of this example only that the Triggering
Event again occurs at the end of the seventh month of the Measurement Period.
Further assume that the actual results (in thousands except for percentages) of
the Xtend Business Unit are as follows:
--------------------------------------------------------------------------------
EXAMPLE ONE ASSUMED ACTUAL RESULTS Complete Q's Only
Partial
Q1 Q2 Q3 Cum % of Cum % of
-- -- -- --- ---- ---- ----
Month 1-3 Month 4-6 Month 7 Months 1-6 Targets Months 1-7 Targets
--------- --------- ------- ---------- ------- ---------- -------
Net Revenue [*] [*] [*] [*] 86% [*] 87%
Gross Margin [*] [*] [*] [*] 82% [*] 84%
EBITDA [*] [*] [*] [*] 65% [*] 66%
Gross Margin % [*] [*] [*] [*] n/a [*] n/a
EBITDA % [*] [*] [*] [*] n/a [*] n/a
--------------------------------------------------------------------------------
In this instance the Xtend Business Unit has met the minimum hurdles established
by the Quarterly Performance Standard for each of the fully completed quarters
and the one month stub period (the seventh month). However, the Xtend Business
Unit has not met the Quarterly Revenue, Quarterly Gross Margin and Quarterly
EBITDA targets for the first or second quarter (the measure of the Bonus I and
Bonus II), or for the one month stub period. Because the Xtend Business Unit's
actual performance relative to the Targets is greater through the full seven
months than through the second quarter, the primary earn out and special bonus
payout amounts will be greater based on cumulative results for all seven months
than the cumulative first and second quarter results. Therefore, the full seven
months would be considered for the calculation. The corresponding Earn-Out
Calculations are as follows:
PRIMARY EARN-OUT: (([*]/[*]) x 90%) x $5,100,000 = $4,007,604
BONUS I EARN-OUT: Revenue through two quarters is at 87% of Target annual rate
of [*], so annualized would be [*], and in excess of the required [*]. However,
Gross Margin is [*] of the Target rate of [*], so annualized would be [*], and
less than the required [*]. Furthermore, EBITDA is 66% of Target rate of [*], so
annualized would be [*], and less than the required [*]. Accordingly, Bonus I
Earn-Out = $0
BONUS II EARN-OUT: Bonus I Earn-Out is not qualified for. Accordingly, Bonus II
Earn-Out = $0
-9-
